Las Vegas, NV · Member since 2016 · 1 post · 0 votes
I have heard of people in California leaving for greener pastures. I have tenants in the home, and wonder what are the guidelines for letting tenants know. How much time is required? Can I list it while they are still there? What are the tenant rights here?
Yes technically you can sell anytime you want but if there's time on the lease left, buyer will inherit it. If it's a decent cap rate they may just keep the tenant or if it's month-to-month agreement, could give them a 60 or 90 day notice to vacate.
Have you asked the tenants at all if they're interested in buying it?
I just want to ask.... you start it out by saying people are leaving for greener pastures. Is that the only reason you are selling? Doesn't technically matter for the question you're asking, but are you also asking the question that's in your subject line- should you sell the property?
Prices are high in California, so the outer edge cities are going to see the highest % of appreciation as people move outward from large metro cities. A ton of people sell out of fear from headlines, usually leaving money on the table. People still need houses in California, even if a lot of people who can’t afford to live here are leaving.
Could you get more money fixing the house up? Do you have your next investment lined up? There are personal objectives you can take that would put you at an advantage to sell instead of fear selling.
My sister lived in Palm Desert for about 20 years and she passed away in January. Because we had been considering having a second, warm winter, home I asked my niece about my sister's house and the possibility of buying it out of the estate. What she said shocked me; my sister bought the house in late 2006 or 2007 and was upside down on the house. I would have thought the place would go for $450-$550K but my niece put me in touch with a Realtor who said the place would likely bring $260K TOPS. And the place needed a complete cleaning and painting (CATS). When I talked to my niece she told me she had been upside down on her condo, also in PD, until just recently when she had refinanced. She had also bought her place in 2007.
That said, I don't think the CA economy is in danger of collapsing due to people moving out. I just thought there would have been more demand for warm winter location houses of the type my sister had: Patio home, gated community with rec center and pool.
I think the question is more like "some people think the market has topped out and its time to take your $$ and run"...then use it in a different market.
No one can predict the top of the market...... you just have to make your best judgment call and don't look back. No matter what you will look back and think "damn I could have made more $$ if I stayed longer" or "thank god I got out when I did"...
Its like being at the blackjack table...... YOU have to decide when you are going to get up and walk away
It's a good time to sell, we are approaching the peak of the market (spring/summer). You can list it, and even sell it, with the tenants still in there but it makes it harder to sell because the new owner has to honor the lease terms of your tenant. So a normal home buyer (who will pay more for your property than an investor) will very likely want the tenants out prior to buying the property.
It's best to just notify the tenants that you want to sell the property and giving them the proper notice (usually 60 days, but can be 30 to 90 days depending on how long the tenants have lived there and if they get any state-funded assistance like Section 8). At the end of that notice date, if they aren't out, you evict. But 90% of the time they leave anyway. THEN you sell the property
Part of your answer is in the name, Palm DESERT. It's not just sunny weather, it gets very HOT, and not everyone likes it. It's not like it's a bustling city so you're naturally only going to have a certain number of people wanting to retire , vacation or live there.
As to selling with a tenant in place, someone wanting a buy/hold property may be interested in having it already leased, and you can sell with the lease.
Regarding people being upside down, maybe they just paid too much for the property. I know when the market crashed everyone was rushing to get in on the crash, and many inexperienced investors bid prices up to over market thinking any buy was a good buy, and obviously, it wasn't.
If your tenants are on month to month you can give them 60 days notice, you can also list the property with tenants in place, putting money into the property to make it look its best will get you the highest price and the quickest sale. Contrary to the headlines California is actually still gaining in population due to births and international migration, so it is up to you if you want to sell, but summer in Palm Desert can be rough because you are asking buyers to come see your house when the temperature outside is 100+ degrees.
First I would google Case/Schiller Index for 100 year graph and then see if you can find a Case/Shiller major metro market report for your area. On avg. the national market goes upper 10 to 12 years and then falls for 5 to 6. we topped in 2006 and fell until 2012 soil she bought in 2007 then she might be close to break even depending on the local market. Some markets are already above the 2006 peak prices while others are 30% below. The 2rd thing I would look for is population and job growth for your local area. If population is going up and jobs are increasing then that will lead to higher rents and higher appreciation but if you are in Detroit where the population was declining then prices will collapse. If it was not for illegal immigration the population of California would be going down and I think that the avg. income must also be declining considering high taxs and regulations. I have never invested in California and am not a local expert but everything depends on your local market and how it is doing. Talk to people working for the city and county to get a feel for job growth, population, planned expansions, etc to see if it makes sense to hold, buy, or sell. Any local Realtor can pull rental comps for that neighborhood and show you how long rentals sit on the market and what current prices are.