New member from Delaware

[Brenda C.]

Hello! I am new to this site, I've been reading through many posts and this looks like a wonderful community that I'm glad to have found.

I am interested in starting to invest in real estate flipping, but I am trying to get myself prepared to do so. Last July I purchased my first home, a 4br/2bth rowhouse. I was in a very emotional place at the time and did not make the best decision for myself and had bad guidance as a 1st time homebuyer. I was looking to help out family members that were moving into town that needed a place to stay. 6 months later, things are not working out with the family and I need to move on and pursue my goals of investing now that I have learned many lessons the hard way. The problem is my equity and most of my monthly income in tied up in this house. When my family moves out in a few months I won't have a need for a 4/2.5 (I added a powder room since purchasing it) for myself alone so I'm trying to figure out if I should sell, rent or stay. Right now none seems ideal, so I'm trying to figure it what would minimize losses. Here's the breakdown of each scenario:

Sell: I bought the house less than a year ago for 150K haven't built much equity, it's a city neighbohood where comparable homes can range from 100k-200k. Currently a short sale for another house on this row for 99k.

Rent: Rents for a comparable home are in range of 1300-1400, not sure if that would be enough to cover any potential repairs

Stay: I would have a lot more house than I need, most if my income will be tied and I'm not sure if property values will be increasing any time soon.

Thoughts? Recommendations? Thanks!

[Rumen Mladenov]

Hey @Brenda C.!

If I were you I would consider these my options, from best to worst:

1) Stay there and rent out a couple of bedrooms to friends who are not going to drive you crazy. Not everyone's cup of tea, but worked great for me;

2) Rent it out. You should make enough to cover the mortgage, taxes, insurance and repairs judging by the numbers, although you will probably not have much cash flow and vacancies are going to be hard on you.

3) Sell it. Even if you miraculously sell it for what you paid, you would lose $9 k realtor commissions and a couple of thousand in transfer taxes.

I agree that values are not going to go up anytime soon, but if you hold it long enough, you will pay off the mortgage and it will be yours. That is how I see all of my rentals - I do not much care what they are worth at the moment, all I care about is that my tenants make my mortgage payments, and in 30 years (or 15, depending on the mortgage term) I will have a paid off asset that brings me solid cash flow every month.