Fixer Upper Best Strategies in PHX

[Mel McDonald]

We bought a home 6 years ago to fix up. Life happened and now 6 years later, we need to do something about it. It's our primary residence. It's a 1972 ranch with a superb location with elevation and views of almost the whole west valley of Phoenix and specifically downtown. We are the 2nd owners. I love it. Houses have flipped on my street for $MM - bought at 400k and sold at 1.7M or bought at 800k and sold for 3.2M, etc...We can either add a second floor and invest a lot (OPM) and sell or invest a little (our equity) not add a 2nd floor and rent it out to keep it for future sake. I'm partial to keeping and renting. Either way, we need to move out. Do we kick our steady tenant out and live in our Scottsdale condo or invest in another property and househack. I feel like we are stalled out because it is too personal and we are emotionally attached at this point. We will be doing all the work ourselves. Husband is in renos and has his real estate license. I don't want to regret the decision 10 years from now, but either option is a good one. 

[Jackson Harris]

Hi Mel, 

Obviously this is a beautiful home that means a lot to you. In that case there's definitely more than just numbers that come into play. I'm local and definitely can see how that is a tough choice with the location.

If it was by the numbers I'd say spend the money to make it worth as much as possible and try to sell, then use the profits to fund what you want to do next. Could be buying other investment properties or other asset classes. 

With it having sentimental value, I think you need to look at where the home is at. Do you like where it's at? Do you go to stores around there all the time, have friends in the area, have other ties to the area? If so, it may be worth it to keep it and do the work over time yourselves and enjoy it! If you don't have many ties, like Scottsdale more, or want a change, then maybe you go for the flip and sell and get going on the next stage in your life. 

[Jana Crum]

Hi @Mel McDonald, I love that you fell in love with your home! You and your husband are in a great position, either way, it's a great financial upside.

I'd suggest reaching out to your CPA about what your tax liability would be if you sold. Also, have you done a comparison of the cost-benefit analysis on renting the home out v. renting the condo out? It sounds like with the repairs needed the home could command a solid rent. This will give you an objective way to look at the situation & determine which is a better financial move. Since you all are emotionally involved I'd get a full picture from the numbers perspective to aid you all in making a decision one way or the other. 

Most importantly at the end of the day, you have to feel confident with your choice. If you want to rent out & keep the home in your hearts of hearts & the numbers support that, go with your gut! You can always get another condo to rent out in Scottsdale, lol!