Getting offers to buy my cash flow rental

[Austen Carroll]

I have a small 2 BR rental in a great location in Salem ,OR. It's been producing a decent amount of passive income for the last few years which we've been very pleased with. We've received numerous inquiries from interested buyers about if we would want to sell. Up until now we just said no not interested mainly because we wanted to stick with our investment to see how it panned out. Now however, we're starting discuss ( my wife and I) how high an offer is high enough to make us let go of our little cash cow?

Property data:

2 BR 2 bath single family

Bought it in 2016 for $168K.

Over the last three years we profited after mortgage, management, tax, and maintainence approx $400.00

The market for downtown Salem is only going to get more aggressive so I don't foresee ever having a problem finding tenants.....

Your thoughts and experiences?

Also, I'm dislocated from the unit. I live in NC. So the idea would be IF we sold the house. Wed invest it in a prop closer to us (east coast)

[Austen Carroll]

CORRECTION CORRECTION!

We've profitted $400.00 per month! For three years. Per month.

[Monjur Quayyum]

I would look into cashout refinance, before selling it. 

It seems you are managing this property for a while and you are well trained by now for it to run smoothly. In the future when you move, just have a property management company. 

[Matt M.]

@Austen Carroll

How much are the offers you’ve received?

[Theresa Harris]

@Austen Carroll  how much money would you pocket if you sold and is that enough to buy another place with similar cash flow?  another consideration is if you lived in it and moved, there is a set period of time that you can sell it before the tax implications change.

[Austen Carroll]

@Matt M. Haven't gotten far enough with offers to hear any numbers. I've literally ended the conversations with "not interested in selling."

So now I'm trying to think.... Is there a number I'm willing to take for it?

[Austen Carroll]

@Theresa Harris

I dont know yet cuz I haven't entertained the idea if selling it.

Again I'd like to reiterate.....I'm not thinking about putting it on the market and selling my property.

I'm just thinking... I should be ready to accept the right offer if it falls in front of me instead of turning down every interested buyer without hearing the offer

[Frank Geiger]

If you can look into the ARV, you'll get an idea of what people are willing to pay. $400 is good cash flow so I'd make sure the profit can generate you 'x' times more than what you're getting. Another consideration is having big maintenance expenses in the near future. May be worth looking into but it starts with the ARV.

[Michael King]

$4800 a year after taxes, note, etc are paid off? That's good numbers on a $168K property. I would be stoked if I could get that out of any of my $180 - $200K properties. Would you really receive a big enough offer to wipe your hands of it?

[David Barnett]

Why not mention to interested buyers that everything is available for a price.  I'd be curious what they say, and then you and your wife can have a more in-depth conversation whether to hold or sell.

[Theresa Harris]

Originally posted by @Austen Carroll:

@Theresa Harris

I dont know yet cuz I haven't entertained the idea if selling it.

Again I'd like to reiterate.....I'm not thinking about putting it on the market and selling my property.

I'm just thinking... I should be ready to accept the right offer if it falls in front of me instead of turning down every interested buyer without hearing the offer

I'd suggest that as part of the process you think about what you'd do with the money if you did sell it. 

[Mike Dymski]

There's not enough information here for us to help. There are 10 replies and we don't even know the property value yet (or the rent or the mortgage or the forecasted returns or really anything).

You are doing the right thing trying to gain knowledge...absent that, I'd recommend selling.

[Brent Paul]

Not enough information here to give you any advice one way or another.

400 per month cash flow is pretty decent.  A few things to ask yourself.  What are your long term goals?  Will selling this property help you reach those goals?  If you do sell will you be able to find a property that can achieve similar cash flow?  

Me personally I would keep it. When I buy I buy everything on a 5 year plan.  In 5 years I either sell or keep renting it out.  Markets go up and down, but people always need a place to live.  I'm not to concerned about market value because I mainly buy and hold.  And the renter pays the mortgage so it's not anything out of my pocket other than a downpayment or some money for rehab.

[Michael Noto]

@Austen Carroll Contact the interested parties and ask them to put offers in writing with pre quals or POFs and take it from there. If you don’t know what people are willing to offer it is hard to give advice on whether you should sell or not.

[Steve B.]

@Austen Carroll are you talking about unsolicited “I want to buy your house” letters and postcards or actual private parties contacting you? In either case your likely better off contacting a local, competent real estate agent to see what kind of offers you can expect from retail buyers

[Austen Carroll]

@Frank Geiger what's ARV?

[Austen Carroll]

@Michael King

That's why I've been set on holding onto it. It's been pretty good for us. Just looking to see if anyone else has been offered a large enough for them to justify selling a prop with the same cash flow.

[Austen Carroll]

@David Barnett

Thanks. My wife and I talked about it. And we decided to have the conversation and have a number already in our heads of what's large enough for us to sell the property. That way we know know we're making a calculated decision rather than an emotional one with offers being thrown at the house.

This conversation I started is to help us find out what's that number would be

[Austen Carroll]

@Theresa Harris I would reinvest the money from the sale to another property local to me. Something I can manage myself in NC or maybe Virginia

[Frank Geiger]

@Austen Carroll is just what your place, fixed up, is selling for in the marketplace. If it's in rough condition, compare with others in that like grade/condition. Need to know the property's value before making an education decision on whether to sell or hold the property.

[Jay Hinrichs]

Originally posted by @Steve B.:

@Austen Carroll are you talking about unsolicited “I want to buy your house” letters and postcards or actual private parties contacting you? In either case your likely better off contacting a local, competent real estate agent to see what kind of offers you can expect from retail buyers

I suspect your dead on Steve.  Just wholesalers doing the mailing to non owner occ's..  everything from I buyers to rank beginners 

to the OP  if your interested in value simply contact a very active agent in your area run comps.. so you have a base line valuation.

and if you want to engage with those sending your letters or robo calling at least you will understand what you have.

they will usually not give you a number and wait for you to talk first and give your number.. if its low enough and you don't know your true value they hop on it.. if you want market value that usually is the end of it.. Very few actually can buy .. they just want to tie it up and try to assingn it to a real buyer.. basically selling real estate without a license which the state of Oregon frowns on. 

See below from the state of Oregon regarding unsolicited wholesalers contacting you and the legalities.

Hello Jay,

Thank you for getting back to me. The advertising copy you attached to your email came out perfectly and will be very helpful. Thanks!

The Agency is well aware that unlicensed “wholesalers” are rampant in our jurisdiction. Addressing the problems is like trying to put out small individual fires in a forest that is burning. The Agency’s investigations are complaint driven, so we rely heavily on the public, and our licensees to bring these individuals to our attention.

Thank you again for the information, if I have further questions for you during the investigation I will certainly reach out.

Best regards,

Frances Hlawatsch | Financial Investigator

State of Oregon - Real Estate Agency

this was one who sent me a flyer on a property they did not own.. they no longer can do this and have gone on to get a license. 

[Austen Carroll]

@Mike Dymski

I bought the house for $168 K in 2016.

Zillow estimates value is $218K right now.

My mortgage ( including tax and insurance) is $831.00

I had tenants in from Jan 2016- July 2019 with a steady rent of $1245.00.

They just moved out. Gonna clean up the house, repaint, and upgrade a couple appliances

I'm going to increase rent to 1450.00 which is what my manager recommends.

Also, my manager takes $125.00 from rent.

Newish roof, no crazy repairs or maintenance forecasted.

The address is 760 E st NE Salem, OR 97301

That's pretty much all the numbers I have for the property.

[Theresa Harris]

You have a good manager in place and with numbers like those, I'd keep it.

[Jay Hinrichs]

Originally posted by @Austen Carroll:

@Mike Dymski

I bought the house for $168 K in 2016.

Zillow estimates value is $218K right now.

My mortgage ( including tax and insurance) is $831.00

I had tenants in from Jan 2016- July 2019 with a steady rent of $1245.00.

They just moved out. Gonna clean up the house, repaint, and upgrade a couple appliances

I'm going to increase rent to 1450.00 which is what my manager recommends.

Also, my manager takes $125.00 from rent.

Newish roof, no crazy repairs or maintenance forecasted.

The address is 760 E st NE Salem, OR 97301

That's pretty much all the numbers I have for the property.

the unsolicited offers or threats of offers you are getting they will want to buy this for 150 to 170k.. you watch. 

[Austen Carroll]

@Brent Paul

Thanks. I'm still leaning towards keeping it. Just trying to generate an idea or HOW much is enough to get me to let go of this asset. Like if someone offered me $265-280K for the house should I consider it?

So far I haven't heard any actual offers. The conversations have all stopped with me saying " thanks, we're not interested in selling "

So now we're entertaining of saying " what's your offer?"

[Austen Carroll]

@Michael Noto

Thanks. We definitely are open to receiving offers now. Just don't want to accept an offer cuz it's a hefty check, when it's smarter to hold onto the asset in the long run