Should we sell it?

[Sejin Kim]

Hello biggerpockets! 

I don't know what to do with my property. 

I and my husband bought our first house in October 2022 when there's a lot of changes in interest rate. ( 5.5 % with VA roan? 5 bed 3 bath house )

For unexpected changes, we couldn't afford mortgage, we rented as Short term rental. 

Luckily my house has swimming pool, spa and it is very specious, surprisingly it was very popular. Even though we were nor in tourist place, house seems almost more than 50% occupancy rate except winter. ( In winter we had mid term tenants) 

However, even though our property is popular, because we pay a lot in mortgage, many times it is negative cash flow and pool seems constantly leaking. We had to put temporary line, it costed $600, and I don't know how much it will cost when we do permanent repair. Also sprinkler breaks, we had to repair... 

At that moment we started to rent, we thought that's the best option for us. 

When we bought a house we were first time home buyer, so we didnt have a lot of knowldge, and we didnt know how to negotiate. ( Realtor didnt really help to negotiate, and lessson learned. ) 

We don't have a lot of equity in it. 

Probably we will lose money when we sell.. 

Also, even though we make negative cash flow, since its big house and income from house is a lot we had to pay more taxes. 

So at this moment, I am not sure if we should continue to airbnb. 

With long term rental, we coulnt cover mortgage at all, with short term rental, there was possibility to cover mortgage ans sometimes it did. 

My husband wants to wait until interest rate goes to down so we can finance but I am not sure if it will ever happen... 

Thanks for reading and any comment will be appreciated. :)

[Theresa Harris]

From the sounds of it, I'd talk to a few realtors and see what it would sell for and put it on the market.

[Randall Alan]

Quote from @Sejin Kim:

Hello biggerpockets! 

I don't know what to do with my property. 

I and my husband bought our first house in October 2022 when there's a lot of changes in interest rate. ( 5.5 % with VA roan? 5 bed 3 bath house )

For unexpected changes, we couldn't afford mortgage, we rented as Short term rental. 

Luckily my house has swimming pool, spa and it is very specious, surprisingly it was very popular. Even though we were nor in tourist place, house seems almost more than 50% occupancy rate except winter. ( In winter we had mid term tenants) 

However, even though our property is popular, because we pay a lot in mortgage, many times it is negative cash flow and pool seems constantly leaking. We had to put temporary line, it costed $600, and I don't know how much it will cost when we do permanent repair. Also sprinkler breaks, we had to repair... 

At that moment we started to rent, we thought that's the best option for us. 

When we bought a house we were first time home buyer, so we didnt have a lot of knowldge, and we didnt know how to negotiate. ( Realtor didnt really help to negotiate, and lessson learned. ) 

We don't have a lot of equity in it. 

Probably we will lose money when we sell.. 

Also, even though we make negative cash flow, since its big house and income from house is a lot we had to pay more taxes. 

So at this moment, I am not sure if we should continue to airbnb. 

With long term rental, we coulnt cover mortgage at all, with short term rental, there was possibility to cover mortgage ans sometimes it did. 

My husband wants to wait until interest rate goes to down so we can finance but I am not sure if it will ever happen... 

Thanks for reading and any comment will be appreciated. :)

@

@Sejin Kim

Many of the things you describe are completely normal.  Repairs happen, and must be done.  You don't say what changed to make the house unaffordable... I'm going to guess loss of income on some level.  At that point you pivoted to AirBnB, and you say that is sometimes covering the mortgage.

I personally don't see a reason to stay in the house.  Even with renting it out, you sound frequently upside down.  As for mortgage rates coming to the rescue... I would suggest you can expect mortgage rates to drop by a quarter of a point at a time (when the Fed meets)... and the way it's looking, probably not starting until 2025.  Point being - it will take the better part of 2 years before you would likely get to a rate where it made sense to refinance (where your new rate was say 1 1/2 to 2 points lower than what you have now.  And even when you do refinance - it will take a year or more to recover the costs associated with the refinance (the closing costs they charge for the refi).  So to me, the refi seems a ways off and probably isn't good justification to hang onto the property. 

Options you might think through would be appreciation - is your area / property  appreciating to where it might make sense to hold onto the property for it to build value.  This can be directly offset by how much you are having to put into the property though.  So that is a question you have to evaluate.

I think I would probably cut my losses and buy into a more affordable house for yourself. 

My 2 cents.

Randy

[Sejin Kim]

Quote from @Randall Alan:

Quote from @Sejin Kim:

Hello biggerpockets! 

I don't know what to do with my property. 

I and my husband bought our first house in October 2022 when there's a lot of changes in interest rate. ( 5.5 % with VA roan? 5 bed 3 bath house )

For unexpected changes, we couldn't afford mortgage, we rented as Short term rental. 

Luckily my house has swimming pool, spa and it is very specious, surprisingly it was very popular. Even though we were nor in tourist place, house seems almost more than 50% occupancy rate except winter. ( In winter we had mid term tenants) 

However, even though our property is popular, because we pay a lot in mortgage, many times it is negative cash flow and pool seems constantly leaking. We had to put temporary line, it costed $600, and I don't know how much it will cost when we do permanent repair. Also sprinkler breaks, we had to repair... 

At that moment we started to rent, we thought that's the best option for us. 

When we bought a house we were first time home buyer, so we didnt have a lot of knowldge, and we didnt know how to negotiate. ( Realtor didnt really help to negotiate, and lessson learned. ) 

We don't have a lot of equity in it. 

Probably we will lose money when we sell.. 

Also, even though we make negative cash flow, since its big house and income from house is a lot we had to pay more taxes. 

So at this moment, I am not sure if we should continue to airbnb. 

With long term rental, we coulnt cover mortgage at all, with short term rental, there was possibility to cover mortgage ans sometimes it did. 

My husband wants to wait until interest rate goes to down so we can finance but I am not sure if it will ever happen... 

Thanks for reading and any comment will be appreciated. :)

@

@Sejin Kim

Many of the things you describe are completely normal.  Repairs happen, and must be done.  You don't say what changed to make the house unaffordable... I'm going to guess loss of income on some level.  At that point you pivoted to AirBnB, and you say that is sometimes covering the mortgage.

I personally don't see a reason to stay in the house.  Even with renting it out, you sound frequently upside down.  As for mortgage rates coming to the rescue... I would suggest you can expect mortgage rates to drop by a quarter of a point at a time (when the Fed meets)... and the way it's looking, probably not starting until 2025.  Point being - it will take the better part of 2 years before you would likely get to a rate where it made sense to refinance (where your new rate was say 1 1/2 to 2 points lower than what you have now.  And even when you do refinance - it will take a year or more to recover the costs associated with the refinance (the closing costs they charge for the refi).  So to me, the refi seems a ways off and probably isn't good justification to hang onto the property. 

Options you might think through would be appreciation - is your area / property  appreciating to where it might make sense to hold onto the property for it to build value.  This can be directly offset by how much you are having to put into the property though.  So that is a question you have to evaluate.

I think I would probably cut my losses and buy into a more affordable house for yourself. 

My 2 cents.

Randy

Thanks Allan. 

Yes, income changed. Currently we live in the apartment and we are renting out whole house. 

Yes, it is good area so I think it will appreciate, just we already bought with high price so not sure how much appreciated. 


I am going toward keeping the property for now expecting appreciation and refi. 

thanks.  

[Theresa Harris]

From the sounds of it, I'd talk to a few realtors and see what it would sell for and put it on the market.

[Ranjit Sandhu]

Quote from @Sejin Kim:

Quote from @Randall Alan:

Quote from @Sejin Kim:

Hello biggerpockets! 

I don't know what to do with my property. 

I and my husband bought our first house in October 2022 when there's a lot of changes in interest rate. ( 5.5 % with VA roan? 5 bed 3 bath house )

For unexpected changes, we couldn't afford mortgage, we rented as Short term rental. 

Luckily my house has swimming pool, spa and it is very specious, surprisingly it was very popular. Even though we were nor in tourist place, house seems almost more than 50% occupancy rate except winter. ( In winter we had mid term tenants) 

However, even though our property is popular, because we pay a lot in mortgage, many times it is negative cash flow and pool seems constantly leaking. We had to put temporary line, it costed $600, and I don't know how much it will cost when we do permanent repair. Also sprinkler breaks, we had to repair... 

At that moment we started to rent, we thought that's the best option for us. 

When we bought a house we were first time home buyer, so we didnt have a lot of knowldge, and we didnt know how to negotiate. ( Realtor didnt really help to negotiate, and lessson learned. ) 

We don't have a lot of equity in it. 

Probably we will lose money when we sell.. 

Also, even though we make negative cash flow, since its big house and income from house is a lot we had to pay more taxes. 

So at this moment, I am not sure if we should continue to airbnb. 

With long term rental, we coulnt cover mortgage at all, with short term rental, there was possibility to cover mortgage ans sometimes it did. 

My husband wants to wait until interest rate goes to down so we can finance but I am not sure if it will ever happen... 

Thanks for reading and any comment will be appreciated. :)

@

@Sejin Kim

Many of the things you describe are completely normal.  Repairs happen, and must be done.  You don't say what changed to make the house unaffordable... I'm going to guess loss of income on some level.  At that point you pivoted to AirBnB, and you say that is sometimes covering the mortgage.

I personally don't see a reason to stay in the house.  Even with renting it out, you sound frequently upside down.  As for mortgage rates coming to the rescue... I would suggest you can expect mortgage rates to drop by a quarter of a point at a time (when the Fed meets)... and the way it's looking, probably not starting until 2025.  Point being - it will take the better part of 2 years before you would likely get to a rate where it made sense to refinance (where your new rate was say 1 1/2 to 2 points lower than what you have now.  And even when you do refinance - it will take a year or more to recover the costs associated with the refinance (the closing costs they charge for the refi).  So to me, the refi seems a ways off and probably isn't good justification to hang onto the property. 

Options you might think through would be appreciation - is your area / property  appreciating to where it might make sense to hold onto the property for it to build value.  This can be directly offset by how much you are having to put into the property though.  So that is a question you have to evaluate.

I think I would probably cut my losses and buy into a more affordable house for yourself. 

My 2 cents.

Randy

Thanks Allan. 

Yes, income changed. Currently we live in the apartment and we are renting out whole house. 

Yes, it is good area so I think it will appreciate, just we already bought with high price so not sure how much appreciated. 


I am going toward keeping the property for now expecting appreciation and refi. 

thanks.  

 Hi @Sejin Kim Can you elaborate more about your property? How much you bought for and when did you buy? Maybe I can do the comps for you. Let me know if I can be any help as I'm a real estate broker from Sacramento area. All the best!

[Kristine Ann]

It's important to track all your business expenses.  Any supplies you buy to clean the house between guests.  Any pillows, blankets, or towels you bought.  Any coffee pods for guests. 

Sounds like you need to sell.  While you are deciding, see if you can't raise your nightly fee.  Sounds like guests like your place and are willing to pay more.

Also, lesson learned on the realtor.  They are salespeople.  Always remember they are salespeople.  They can be really helpful, but in the end they make money from commission.

[Scott Scoville]

Hey Sejin, there are always creative options to keep a property. Have you ran the numbers as a long term rental? Rates should come down in the next year or two, so be cautious about selling at a loss, when in the long run it may be better to hold. Holding properties in good times and bad, typically are very forgiving the longer the horizon. That's assuming its a good property in a good location. I'd be happy to chat over the phone and help strategize if you're interested.