Should i sell this house or not

Question

So my wife and i have always wanted to be in rental real estate so we decided to buy a house since a mortgage was cheaper than pay monthly rents. we decided to buy a property that we felt would make a great rental based on the location and numbers... so we bought in town of the school i grew up in..Weve owned the property 7 yrs this past Dec. Its a 1420sqft house 3/1, 2 blocks away from the school, with a complete "extra space" upstairs room that is neither a BR or living space due to no heat/air.. we owe 75000 on mortgage but the hosues recently sold in town (very few) are going for between $125/$145 a sqft. We paid about $63sqft when we bought.. my question is, should we sell? I have a eye on a property thats bigger (we now have kids), that has been vacant for no less than 8 years. The seller, a older lady, seems to have no care of doing anything with it and i see a possible opportunity of a cash buy (with proceeds from our personal home sale). I think its realistic that i could pay cash, and renovate the property with all the proceeds of our personal home sale... and would then plan to refi and pull our initial cash back out... leaving us with pretty much the same mortgage payment we currently pay.. but for a larger property, worth more, and still have cash from the sale of our orginal house.... i would love to know everyones thoughts on the idea.. as well as thoughts of if you would sell the house given the increase in price per sqft from when we purchase it... ps since the purchase of our house, the kitchen has been redone with quartz counter tops and tile backsplash if that changes anything. Thank you so much for your input and advice!

Tyler Gibson · Answer

@Jordan Johnson Sounds like a decent plan. Where would you live while doing the rehab? Could you do a cash out Refi or HELOC on your current home and do the same thing? If you leveraged your current home and later rented it would it still cashflow? If you could I would try to figure out a way to keep what you got and acquire the bigger home. If you can't find a way then go for it.

Jordan Johnson · Answer

Sorry for delayed reply. Thank you both for thoughts and input. I would love to pull from my current residence and aquire the 2nd property, just not sure if I can get it done. We are going to reach out to small local banks about that. The thing that will be a big part is what the seller will want for the property. She has left it vacant for no less than 10 years. It is a elderly mom of a friend/coworker of my wife. We actually walked the proerty and inside of the house a few months back. It definitely needs work. New roof is a definite and I feel theres some issues going on in the basement... Possible moisture issue, needs a clean up and encapsulated. Assuming that can be taken care of and preped correctly by a professional (at not a ridiculous high cost), Im still interested. Never actually met the seller but as I stated, shes done absolutely nothing with it for a long time, but has never said how much she wants for it. Im hoping to go to her with a opportunity to be done with it, but at a price that has plenty of meat on the bone to justify everything I will be doing. The ultimate goal at this point is to acquire the property (hopefully using seller financing), use money from heloc of current property to renovate everything, refinance the property, paying off the seller and heloc (but keep it open to use for other real estate deals), and renting my current residence once we move.

Nik Corbaxhi · Answer

@Jordan Johnson, congratulations, seems like you have a couple of options.

1. go with your plan. Sell the house and hopefully the proceeds buy this other property for you.

2. If I were to guess, the school enrollment numbers are going up and the school is expanding, hence explaining why the price of the house has gone up significantly. In that case, if you expect them to keep going up, then hold and look into renting to students. Potentially you could turn the attic space to a 4th bedroom (do this legally if you decide to do), and rent to student. The return would be great for you. as for the other house, still chase it with just the down payment and regular conventional loan process.

Whatever you decide to do, you have to know what your goals are. If you are looking to invest into real estate, this could be a break for you. If not, take your gains and move on.

Should i sell this house or not

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