First time seller - seeking advice about renting or selling.

[Pete Davey]

Hi - I am in a situation and want to ask "what would you do.."?

I own a 2+2 Townhome in Orange County, CA. 

I owe - $289k.

I listed it for sale, and got a ton of interest, picked a buyer, and started escrow. $5k was put in as earnest deposit. Contingencies dropped, almost closed, and we just heard they are backing out due to breaking up their marriage and cannot afford it solo. I have a clause in the contract that they will forfeit their earnest deposit.

It was listed at 399k, and sold for 404k. I have backup buyers... 

This was my first time buying and first time selling. I bought it in 2007 right before the major decline and never thought I'd get out of here. 

The bank appraisal came in at $387k, conservative...

The plan was to sell high, and rent and wait the market out. Who knows what will happen. Maybe interest will go up and it will get even worse. The story here is that inventory is low, so prices are pushed up.

I'm very happy that we didn't get a rental or sign a lease, but we were very close!! Renting would have been much more expensive than our current situation, even with high HOA, but we just wanted to get out as we are scared the market might dip again.

Maybe this is a blessing in disguise?

I really want to own more properties and rent, dip my toes into self managing (instead of hiring a PM) - I have the personality and temperament, and I know how to repair things.

Now that this has happened, I'm thinking - maybe we rent this place out instead (now that we REALLY know the rental market from doing a ton of viewings here in OC, wow it's high...) go rent somewhere else, and do either a refinance (would give us cash, but would raise our mortgage as interest won't be much or any better by about $300/mo not to mention closing costs) or a HELOC and use that money towards another rental and just start to build my portfolio?

I've never done a refi or heloc, so uncertain how much I should take out, and what I should do with it. Let's say I refi for 387k, do I then need to pay PMI since I won't have any equity in the home anymore? Or do they not allow 100% refi's?

I've been looking and can find smaller 2+1 or 2+2 condos for 260k or so here in OC and rent them for $1700-$2000 which would cover PITI, taxes and HOA. I'm apprehensive on buying far away for cheaper and using a PM company - or is that just dumb and should I go for it? Or should I just find another person here on BP in the same boat and go in with them? Apprehensive to rub pennies with a stranger at the moment...

Well - what would you do in this situation?

[Carlos Altamirano]

Hello @Pete Davey

interested situation you have there. From the numbers, it looks like you won't have much left after you refi, maybe $15-20k? Not much for a down payment, or maybe for an FHA 3.5% down? Depending on the city where your condo is located, I would consider an AirBnB rental. Have you ran the numbers on that? I would bet that it will most likely cashflow. Not sure of any of your credit or income information but I would refinance that condo, use that along with that I have saved for a 3.5% down FHA on a duplex that I can rent out the other side either long term or airbnb as well. Good luck !