Off-topic. Real Estate ?

[Doug]

I have a rental condo. Tenant is moving end of the month. I think I'll sell the place instead of re-renting.

My wife has idea of selling it ourselves, without agent. I'm against that idea. Pretty sure we will use agent.

Paid 70k ( no mortgage) a few years ago. Expect to sell for about 95k. The gain I'm assuming is taxable. If those prices are accurate do I gain 25k or 19.3 k ( assuming 6% to agent).

I don't want to play landlord anymore ! Thanks.

 

[Woody0]

I have no idea how the taxes are in your location (Earth).

1. Your gain will be what you net from the sale minus your cost (i.e. you subtract your agent's commission from the gross).

2. Your cost might be more than you paid for it, if you have made and paid for improvements. Prior to the sale you might make improvements that will return more than the improvement cost. In particular improving the kitchen (including new appliances if they are part of the property) often returns far more than the cost and helps the sale.

3. The gain will be a capital gain and subject to whatever the tax rate might be on such gains.

 

[WildBill]

Don't be cheap Doug. If you had a place that was worth half a million, not using an agent or using something like Assist 2 Sell would make sense for the savings. Saving 6k is not worth it for what a realtor will help you do. The hassle of listing it, showing it, dealing for it...all better handled through an agent for that much. Just look around though, might not be many agents willing to do it for that small a price. I know around Vegas most agents wouldn't waste their time with anything worth under 100k, but that is the local market for you.

Do you have a use for the money in mind? If you do, might be better to refinance at the low rates today and take your money out tax free. In the future you could nominally live there for two years and then get the gain tax free, or maybe the laws are eased even more so it becomes easier to sell with no tax. I would take a tax on it only if you really need to get out of it.

 

[Doug]

WB; Thanks. However re-financing isn't needed, I own it outright. I agree about using agent. I have an agent that I've used to buy 3 properties, and sell one. He's eager to sell it, even used to cold-call to see if I wanted to list it.

These condos sell easily, they make a good first property. It would rent for $900 + easy. They are located near Pfizer, and a submarine base. Rents and property are high here.

My tenants there have been great ( both were chemists). They never bothered me for minor problems. I don't want to move in for 2 years, the place is about 700 sf. Condo fees about $125. One could buy it with 5k down, and have a mortgage comparable to rent, even cheaper.

I don't want to get stuck with a bad tenant, luck might be running out there. My plan was to sell it when she decided to move. I didn't want to force the girl out. She never called me for anything in about 2 years, paid timely, so I kept the rent low ( $750). I was about to raise it. I believe in karma. I've been a renter before, and received good treatment. I used to mow the lawn at the last rent I had.

The place wasn't even intended to be a rental. I bought it with the idea of having my elderly mother live there ( Alzheimer's). I lived in another unit there at the time. That didn't work out, mother since deceased.

It's the right time for me to sell it.

 

[WildBill]

Doug, you only nominally have to live there. Move in for a month to clean it up, then have bills in your name there and make it utilities included for your renters for a couple of years. It doesn't take much.

Still though you would be nuts to sell it at that kind of return you are getting. Out here in Vegas people pay $900 for a 3 bedroom apartment. Rent of about $1100 gets you a decent 3 bedroom house. People barely clear anything being an investing landlord. Amazing how people still do that around here. Do you really have a better use of the money? An alternative you could try is to just sell it on contract. Take a down to give you some cash and then a month payment that should work out to close to the $700 or so you would net (after the condo fees and regular maintenance costs).

Housing has such favorable tax treatment, I would just hate to have to pay something few do. Just my opinion, but the tax treatment is one of the few good reasons still left in getting into housing as an investment at this point of the cycle.

 

[Doug]

WB: I'll have to think about the options. " Nominally" living there is interesting, does the IRS buy that ? I'm not going to move into a place half the size of where I'm living, even for a month !

I don't like utilities included with a place that has electric heat. Some A-hole tenant could punch the heat to 90 degrees and open all the windows.

I figure about an 8% return on capital given these conditions:

property worth 95K

rent 900

Ass fees 125

Property tax 1000

Tenant is 100% perfect and nothing mechanical fails ( heat/ac , appliances, etc.)


Property could continue to increase in value ( I think it's high enough now) . If prices increase much more , people will leave the area IMO. That is good for me. A bad tenant could severely reduce returns. I will consider options, thanks for your thoughts.

 

[WildBill]

What area is this? A condo for 90k? People here only remember when 90k could buy anything. I can't imagine why people would leave the area.

 

[Doug]

What area is this? A condo for 90k? People here only remember when 90k could buy anything. I can't imagine why people would leave the area.

It's Groton, CT. The term condo is an ownership style. It's really little more than a studio apartment you own. It's about 700 sf. Vegas has similar units as condos. Prices are roughly comparable.

You have a decent bedroom, small bath off of BR, decent size LR, and an aisle style kitchen with all your appliances including w/d hookups and a patio with the closet for storage. It's essientially a 1 BR apt. that you own. The upside is a nice clubhouse with jacuzzi, sauna, billiards, weight room, indoor half court basketball, and outdoor pool. The downside is about 250 units have access to it all.

A lot of low life types live there. I lived there in a building of 12 or 16 units. In that building alone lived at least 2 drug dealers and an aging prostitute.

You get a mixture. Some Pfizer professionals that don't want to buy because they may get transferred, but they like being 2 miles from work. You get Navy guys with some rank that buy, and everybody else. I rent to Pfizer people. I do that by having my listing only placed on Pfizer employee bulletin board with help of Pfizer employees ( previous tenant).

Bill, I used to live in Vegas off Eastern, between Fremont and Lake Mead Blvd. There are houses there for under 100k. I believe Vegas is still slighty cheaper than here, but not by much with the boom. A decent house here starts around 250k, 200k if you're willing to accept an older one, or move to the boonies. It ain't cheap here ! Consider the size of this 95K "condo".

 

[jjgold]

Real Estate is still wave of the future

majority cannot afford homes and especially with influx of all types of races coming in

by apts and forget gambling

 

[victorygallop]

If you don't need the money.

Keep it.

Sounds like a great little earner.
Close to the indians as well.

 

[volhound]

FSBO is the way to go if selling. Pick a time frame for how long you will keep it on the market. If it doesn't sell in that time frame, then get a real estate agent.

run an ad and hold an open house. You might sell it in the first few days and save 6%. If your agent did the same thing and sold it the first weekend, you will be pissed about the 6%.

good luck, you have a win/win situation

 

[sherman]

Doug, I reccomend using a Realtor as it is not as easy as it appears to sell a house (of course I am biased as my Wife is a Realtor)

 

[LEYKIS101]

Some good suggestions in this thread.

Interview 3 (or more) reputable agents in your area. Ask them what they will do to market your condo, why should you list with them etc. You may not know this but the seller's commission is completely negotiable, you may find an agent who will do it for 3-5% (cheaper than the long-time standard 6%). What I'm saying is the time and money you will save by hiring a RE professional is money well spent.

Best of luck to you Doug.

 

[Kiss1]

Some good suggestions in this thread.

Interview 3 (or more) reputable agents in your area. Ask them what they will do to market your condo, why should you list with them etc. You may not know this but the seller's commission is completely negotiable, you may find an agent who will do it for 3-5% (cheaper than the long-time standard 6%). What I'm saying is the time and money you will save by hiring a RE professional is money well spent.

Best of luck to you Doug.

Agree, also consider what you "need" to get out of the property. A couple of marginal improvements can add thousands to the price and offset any realtor fee's. A sharp realtor will know exactly how long your property will list before selling, if it's just a few days ( Las Vegas ) use that leverage to reduce the "juice."

- K1

Good Luck Doug

 

[sherman]

Some good suggestions in this thread.

Interview 3 (or more) reputable agents in your area. Ask them what they will do to market your condo, why should you list with them etc. You may not know this but the seller's commission is completely negotiable, you may find an agent who will do it for 3-5% (cheaper than the long-time standard 6%). What I'm saying is the time and money you will save by hiring a RE professional is money well spent.

Best of luck to you Doug.

Ley is right, you WILL be able to find an agent willing to do it for less than 6% HOWEVER, remember the "you get what you pay for". There is a reason TOP AGENTS will NOT list for less then 6%...their services are worth it!

 

[volhound]

Doug

I sold my house for 98k and saved 5-6k. I sold it to the 1st person to look at it and didn't come off the price. My wife let me use that 5k to outfit our new house with 3 new tv's (2 HD) and home theatre construction (knocked out a few walls in the basement) - that is why it was worth it to me

No offense to your wife Sherman, but nobody is going to care more than you when it comes to your house and your money. If you do not have time or care about the extra money, then a realtor is the way to go, but I felt a sense of accomplishment when it was done. I spent $80 on a picture ad in the newspaper advertising an open house. I printed off some generic sales contract and a TN disclosure and that was it. I fixed a few things for the girl who bought it. It was very pleasant without realtors involved.
I was in the mortgage business and saw people, including myself, get very frustrated with 2 realtors involved. That makes 4 different parties invoved instead of 2. There is no communication lost with 2.
I know that I was lucky and that it is not a testament to me or what I did, but it can happen that easily, especially a good location like you have.

if you have an exit plan and time period to try on your own before get a realtor, then you cannot lose.

good luck

 

[LEYKIS101]

Sherman,

You're in Mortgages and loans correct? If so, how is business lately?

 

[valueman]

Don't know if you have them in the US but in canada there are a few 1% realty companies that are just as good as the 6% guys. Just a thought.

 

[hotsalsa]

Selling a property can be intimidating, but the reality is that the process is relatively easy. I have sold 5-6 houses by myself. If you can afford to advertise a little, hold open houses on weekends, and negotiate a price, there is little need for paying an agent 6%. Escrow does most of the paper leg work.

 

[sherman]

Sherman,

You're in Mortgages and loans correct? If so, how is business lately?

Yes I am a mortgage broker. Business is well, thank you.