About 3 years ago we bought our first townhouse, now we are buying a new home and plan to be moving into it with 2-3 months.
The townhouse from 3 years ago is now 8 years old in a fairly good neighborhood. We had picked it up for $110,000 and the real estate agent told us that we could sell it on the market today for $220,000.
We don’t know if we should sell the townhouse or rent it out. Our agent tells us that the townhouse is getting to old(It’s in very nice condition) and we should sell it, but we are afraid that they are just trying to make quick money by getting us to sell it.
On the street that the townhouse is on they are building new townhouses that are going for $260,000 at this time.
At first we thought renting it would be a good idea, then selling it would be better. But after looking at buying another new townhouse and renting it out we thought that we would lose money due to the buying and selling fees on the new investment and old townhouse.
Would it be better for investment wise to sell the townhouse now and take about 100,000 to invest in other properties or rent it and sell it in a year or so?
I guess the bottom line is should we rent is some more, sell it and start flipping new houses or bird-dogging.
Do you own the town house outright, or are you still paying it off?
If you’re still paying it off, would the rent you’d get on it cover the repayments and running costs?
If you own it outright, have you thought about taking out a line of credit to purchase other IPs, or to help with your move? You could set it up so that the rent covered the LOC and running costs of the rental, and free up some equity at the same time.
The RE agent would get much more on commission from a sale than from property management fees, and I have a feeling this is why they would urge you to sell. There’s no way an 8 year old property is too old to rent out.
If you do sell it, do you have a solid plan with what you’ll do with the proceeds? How do you see whichever option you take now panning out in the long term. If you could jump ahead 10 years, and look back, what do you think you might wish you had done? Are you under any pressure (other than from the greedy agent) to sell the town house?
Something I find useful if I can’t make a decision about something is to sit down and make a list of the pros and cons of each course of action available. Perhaps if you do a list of short term and long term pros and cons, it might make your decision easier.
I’m not trying to give advice here, just some things to think about. Ultimately it’s your decision to make, and you have to make it to suit your plans and strategies. It’s a good idea to have an idea of what you want to achieve in the long run, and then use what you have in the best way to reach your goals. Sort out where you want to end up, and work out how the town house will best help you on your way there.
Good luck. I hope it all turns out well for you.
Cheers
Kez
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Nope we don’t own it out right. We still have about 100k to go.
The average monthly payments are $950 a month, and from the local market we could rent it for about $1,300-1,400 a month.
In our area(Northern Virginia) the housing industry has been in a really big boom, and because of that we don’t know if we should sell while the price is high or keep on renting.
We did a list of the pros and cons, about 5 times now for short term and long term.
If we rent the townhouse out for one year, our bank tells us that they will give us the money we need for another IP as we will have the exp as landlords.
From looking at that we could take a lone from the house for 50k, and use it to invest into another house. But we don’t like the idea of rasing the price of the house just to get another one.
If we sell now, we would get about 100k that is tax free, because of deals on the house and our banking accounts, we would have to put 15k(bond or something, savings account) into the bank so that we don’t get charges to our saving, checking accounts for not meeting the minimum balance requirement for money marketing accounts. That would leave us with about 85k. 50k down on another townhouse would put it at a price that we could rent it out for, but then we have only sold one townhouse and paid for a new one, and are back to just owning two IP’s because I don’t see how we could get something with the other 35k.
So we are left with two things we could do and they look about the same. Due to our lack in exp we don’t know what will be the best option to keep on investing in a year or so.
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