To Sell or Not to Sell

[Daniel Stubbs]

First, I want to give a shout out to BiggerPockets for giving me an avenue to gain valuable knowledge. I’ve been working at a job I used to love for over 20 years. The company I work for is great! With this in mind I am getting to the point in life I need to pay myself back and provide a sustainable future for my family. I have always been interested in Real Estate and have a few friends who have made a good living in both commercial and residential properties. I however have never committed to following in their footsteps, until recently. I will need to keep my day job for a little while longer, but my ultimate goal is to be able to quit in three years, fill the void of my 9 to 5 paycheck with horizontal income, and spend more time with my family.

If you’ve read this far thanks for letting me share.

On to my scenario and question(s):

We currently have two houses, one in Florida and one in Arizona, both with a mortgage. Our permanent residence is now in Florida. We have renters in our house in Arizona. Our renters are long time friends and we are giving them a very good deal to live in our house, in my opinion. Our rental house is ~3000 sq ft and could yield $2000 per month. Our mortgage is ~$960 per month. We are charging $1200 per month.

I reached out to a real estate agent recently to ask some questions about listing our house. He walked the house and pulled comps. With a few minor repairs the market looks as though we could get ~$300k if we sold today. We owe ~$140k so we have some equity in the house. We let our tenants know we are looking to sell, and they’ve asked if we would entertain selling to them. I have no problems with this as long as they can procure a loan. They want us to carry them but since we still have a mortgage, I think this is out of the question. Their lease is up in September of this year. My wife and I discussed some ideas of what we could/should do. If we could get the whole $300k that would be great, but I don’t think our tenants could afford this.

Here are some of my questions. As they are friends should we look at accepting a lower price on the house? My wife and I discussed selling the house to them for $275k. Or another option would be to keep the house and raise the rent to $1600 per month. If you were in our situation what would you do? We really love the family that is renting from us! We also want to get the equity out of the house so we could invest in a rental property closer to home.

Thanks again for any advice.