Should I sell my home?

Question

Closed on it december 2018. Got it way under market. Paid 282 with 3% downpayment. Appraisal waiver came back 375 which didnt account for my remodel. It was dated and I updated it. Didnt put much into it did it mostly right. Im pretty sure I can sell it for around 420-450 at the lowest 400. The area is in utah and the town is in  a good location. Right now I rent out 4 bedrooms out of the 5. I live in the 5th room. Im getting currently 2250 / m which makes my living expense almost nothing. If I dont sell ill refi and then ill make a little. If I move out ill be making around 700/m of cash flow. The reason I want to move is its clear a crash must be coming due to forbearance. ALso I do commute a total of 2 hours a day 6 days a week. I was considering moving and renting for a little bit then buying or I was thinking about doing a 1031 and getting another propetty but at the same time the market may drop. If I stay I live for free but commute 12h a week and destroy my car with miles , if I move my costs of living goes from almost nothign to around 1.2k-1.5k. I am really unsure on what to do.  Thoughts?

Theresa Harris · Answer

How long do you plan on staying at your job?  You'd cash flow $700 once you move out.  You could find a place closer to work, get a roommate and split the $1200-1500 in rent.  You'd still be living for almost free as your renters in your home are essentially paying your rent in the other place.  Depending on what you rented (a 2 or 3 bedroom), you might actually come out ahead.

Ben Ryder · Answer

If I sell my home ill make around 90k before taxes. In terms of renting it normally I wouldnt cash flow. Only renting by room would allow me to cash flow. Luckily its 10m from near by university.

Becca Summers · Answer

@ben If you do sell wait until your two year mark so you don't pay capital gains. Talk to your accountant depending how you been doing taxes but because you owner occupy you should be fine and not need to do a 1031 exchange.

Also I am a fan of keeping everything and selling only if you have a good reason. However I know most areas don't allow that many singles so if you converted it to a full-time rental would it still cash flow?

or could you take equity out of this property cash out refi or home equity line of credit keep it and use that equity to buy a new property? And your commute sounds terrible so I would move but I don't know if I would sell.

Ben Ryder · Answer

Would you reccomend getting into mullti family? Ill have around 200k cash when I sell my home. Currently I am in south weber and I know thats upcoming. I have a half acre right now as well. So conflicted on selling. It seems like everything up there is way more expensive than down here. Thoughts?

Marcus Auerbach · Answer

@Ben Ryder

Sounds to me like you should move just to cut down on your commute.

There is a lot of clickbait on the internet talking about a market crash. Nobody clicks on a video about the market being boring. There is no indication for a crash, just the opposite. Most of the forbearance filings are being worked out, numbers are already comming down, many people just filed as a precaution. Foreclosures only happen if homeowners have no equity. Nation wide we have an average of 135k in equity. If you have equity you can always sell the place and avoid forclosure. Easy.

The market is driven by demand, which is mostly from Millennials, who make up 40% of home buyers now and are just getting started. Sorry for the boring news, but no crash in sight.

Chase Murdock · Answer

I echo what Zachary said -- it all comes down to your goals. I'm also in Utah. If your goals are short-term, you're likely sitting at a high that may take a few years to get back to and you might consider selling now. If you're thinking on a longer time horizon, there's sizable population growth forecasted for Utah (some say population should double by 2050 in the state) and holding over the next many years to build equity, even if you're just breaking even, will put you in an enviable position in several years. To me, that's worth pushing through a correction/crash. But it comes down to your long-term strategy.

Zachary Ray · Answer

It all depends on what your long term strategy is. You can make a great profit from it if you sell less taxes. You can roll that into something else.

Mark H. Porter · Answer

My personal opinion?  Forbearance, and more so foreclosures, on SF owner-occupied homes will lead to more people needing apartments.

Jaquetta T Ragland · Answer

@Ben Ryder the question I would ask is what’s your long term goal and start there when it comes to making a decision

Ammon Stuber · Answer

The market is very strong in Utah as of right now. Most houses go 10-20k above listing price and last 1-7 days on the market. The low interest rates are making bidding wars very common. If you want to get the most out of your house, I would say, sell right now and get into an area close by that is guaranteed to grow soon. Those are the areas that are most likely to overcome any dip in the market. I’m talking about areas like eagle mountain or tooele. These areas also qualify for programs that allow you get lower Interest rates. Your other option would be to sell and rent until the crash you’re expecting.... happens. Sounds like you are prepared financially, for either. There will be a surplus of renters when the eviction ban is lifted, most renters will leave their current homes because of back rent. I would say get into one of those hot areas with a house with great rental capability(lots of parking.... extra entrances... ect.)

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