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Updated over 9 years ago,
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Sale or refinance/hold
Hi BP folks,
In 2005 a bought a 2 beds 1.5 baths townhouse where I lived for 5 years. In 2010, I bought another single family house as the townhouse was too small for us. Not having a real estate investor mind set I decided to rent it out even though it had a negative cash flow. What I though back then is to consider it as a saving plan for college tuition for my 2 kids, assuming I will have a good equity from principal and appreciation in 15 years ( presumably my kids will attend college in 2025). Now that I am interested in becoming an investor and started learning about the real estate, I realized that renting my townhouse isn't the way an investor may have done it. So I need advices from the pros in BP to tell me what they think. Here are the details:
Purchased price $146,000 in 2005
Actual estimated value: $165,000 (based on comps of $175,000 and $180,000 same neighborhood slightly bigger).
Balance on the mortgage: $132,000
Apr: 6%
Monthly payment ( including prop tax and PMI): $1245
Monthly rent: $1100
Property management: $88
The townhouse was vacant for a total of 3 months for the past 5 years
We brought some upgrades to it of a total of $9000 in the 5 years period
Townhouse in desperate need of new roof and vinyl sidings (quoted $10,500). Also need but not urgent 2 windows and the driveway to be redone.
My goal is to start flipping and buy/ hold starting next year. Should I refinance my townhouse and keep a tenant or fix it and sell it?
My credit score is in 800s and the reason I didn't refinance while interest rates are low is because I had a business and didn't do well, so my income to debt ratio was high. Now my business is sold and went back to full time job, just recently, so I should be able to refinance or purchase a new property in the near future. Thanks in advance BP