What Would You Do With Our House?

Question

Hi all, thanks in advance for sharing your thoughts. We're about to come into some money and get started with our first house hack, flip and/or multi-unit rental in St. Pete. Although prices are higher in Pinellas, our house is in Polk where, supposedly, the market is more competitive. It's a work in progress, but according to comps and a prospective listing agent, we should be able to get about twice the remainder of our mortgage (~$170K vs $87K) just by finishing up a few small projects we're working on. I'm wondering if she wasn't just telling us what we wanted to here so that we'd sign on with her. IMO, there's quite a bit that still needs to be done (mostly exterior, but also in the kitchen) to bump up the curb appeal and get it sold quickly, but what do I know? Is there any rationale for doing anything beyond the few small things we're wrapping up? Everything I've read lately says no, you won't get a positive return on any remodeling done to make things look better. Theoretically, we could rent it out instead, but I don't see the rent covering our mortgage and a property manager's fee, which would probably be necessary since we'll be over an hour away. We could also go the FSBO route, but you never know how that's going to go. Your comments are welcome and appreciated!

Nick C. · Answer

Polk more competitive than Pinellas? No chance. Without knowing the address, the neighborhood, and what the comps look like, it's not possible to tell if the place should sell for $170k. But as a general rule, although you probably shouldn't do a full remodel (gut the kitchen), it's always best to get some landscaping done, paint, clean the clutter, etc. You never get a 2nd chance to make a first impression, you want the house to show as best as it can the first time through. If you can spend a little time and sweat equity making the place look sharp I would do it. I would not rent the place if it there's no chance of it positively cash flowing.

Tom Shaw · Answer

@Nick C., I should have refined my competitive comparison to specific locations, but according to Redfin's new Compete Score, competition in Lakeland (where we live) is marginally higher than the areas we're looking at in Pinellas (Gulfport and the beaches). The scores for each area are developed using statistics for the past three month for the number of competing offers, the number of waived contingencies, the sale-to-list price ratio and the number of days on the market. On the whole, in a county to county comparison, I'm sure you're right, though.After revisiting the rental option, we might be able to cover the mortgage and property management, but the minimal profit doesn't appear to be worth the trouble. We appreciate the insights that you and Kristin Kiddy shared. We're getting a second opinion from a C21 realtor later this week, so we'll see how that pans out. The good news is, our offer on a duplex in Gulfport has just been accepted, so we're off to the races! Thanks again!

Kristin Kiddy · Answer

You know your house better than anyone else, which can be a great asset IF you can separate yourself emotionally from it now. Go online, use Zillow, Redfin, etc. and take a look at all the houses that have sold in the last 6 months in your neighborhood. Pay close attention to the ones that have photos. Look at those photos and compare your house to them. What did those houses sell for? What was the price per square foot cost? How would that price affect the "sale price" of your house? Add money if your house looks better, take off money if your house looks worse. Try to look at houses that are a similar size and number of bedrooms. In other words, don't compare a 2/1 900 sq ft house to a 3/2 2000 sq ft house... it doesn't work. I know you are not a realtor but you can get a good REALISTIC idea of what your house could sell for from doing research and that will tell you if this Real Estate Agent is being truthful.If you want to sell fast, you do need an agent! FSBO rarely pan out. You need the marketing, GOOD PHOTOS, and access to the MLS. Plus help with all the legal paperwork that comes with selling a house.As far as doing work, No, you will probably not make back all the money on doing a full kitchen remodel, but if you have unfinished projects you DEFINITELY need to finish them. Fresh paint, INCLUDING baseboards and trim! goes a really long way to freshen up a house. You want to tour your house and look for anything that looks worn out, broken, dirty etc. Because that will cause a potential buyer to take off dollars mentally.One last thing, Make sure the agent you pick uses professional photos! That will make or break a listing in today's social media market. And to prepare your house for those photos, you need to clean and declutter like you've never done before! Once you think you've decluttered, go back and remove at least 1/3 more stuff. This is only temporary for the photographs. You know how they say a photo adds 10 pounds? Well it adds clutter to a "clean house" too. Good Luck!