This post is Part 2. To read the original post click here. PCS, Out of State, Divorce & the Other Reasons You Probably Own a Rental Property in Killeen
Ok, so we’ve got the basics of the story down but now comes the important part… What are you going to do about it? Luckily, this is a scenario we walk through constantly and I have some thoughts on the subject.
SELLING YOUR RENTAL PROPERTY
So, lets start with selling since it’s probably the reason you are reading this and honestly, if you can get it to work it is probably the best option. If you have enough equity in the property then this is pretty straightforward. Basically, you can either list with an agent and go through the traditional sales process of doing repairs, listing, negotiating, paying commissions, etc or sell to an investor like myself.
Both have their place and probably the biggest deciding factors for which is the better choice are how many repairs are needed and how much you want to deal with it. If the house is in good shape and you are not under a time crunch then listing with an agent is likely your best bet.
Honestly though, getting work done from a distance at a reasonable price and quality is tough and time consuming and you will be paying your mortgage and taxes the whole time so it’s worth doing the math to make sure it really nets you more money. If the monthly payments are a drag, the house needs work and you don’t want to deal with it then that’s where Liberty Home Buyers can help. I am happy to offer you advice at no cost and can sometimes offer you options you may not have considered. Honestly, if selling isn’t in your best interest, I will let you know. We buy plenty of houses, I don’t want the karma (or reputation!) for steering anybody the wrong way.
However, this is really the most simplified of scenarios since the majority of tired landlords in this scenario don’t have enough equity to sell easily. Yup, that zero down VA loan may come back to bite you and if you have owned the home less than 10 to 13 years you probably don’t have enough equity to sell without taking a loss.
That said, keep reading as we do have a second solution for you!
SELLING YOUR RENTAL – PART 2
Ok, so maybe you don’t have enough equity to sell outright but there is another solution we use pretty often in the Fort Hood area. Commonly known as “Owner Finance”, “Seller Finance” or “Subject To”, this is basically a process in which we take over payments of the current mortgage from you. The note stays in your name while the equity gets built up but you are no longer responsible for paying or dealing with the rental.
The downside is that your VA loan is locked up so realistically you can’t take out another VA loan until the property is paid off years down the line. While this obviously isn’t ideal, it can be a thousand times better than the stress of having negative cashflow and all the other headaches of a house that you don’t really want.
RENT YOUR RENTAL (Makes Sense!)
So, if none of the above works out or the loss from selling would be too great, the only other real option is to buckle down, find a better property manager and keep renting the property out until you get to a point you can sell. As I mentioned before, you typically get to that point somewhere around 30 percent equity or 10 to 13 years depending on if you put any money down or rolled any closing costs in to the loan.
If you do need to go this route just remember to plan for and keep up with repairs, maintenance and all the other stuff that goes with being a landlord. I guarantee that it will all cost you way more down the road if you don’t and ultimately pushes back the date when you can sell at break even or, fingers crossed, a profit!!!!
ONE LAST THOUGHT – YOUR VACANT HOUSE
I see this happen a lot so I thought I would throw it in in case it helps someone. If you have a property that has sat vacant for an extended period of time it’s probably a good time to have what my Momma used to call a “Come to Jesus” moment with yourself.
Bottom line, your vacant property (that you are hopefully still making the payments on!) is almost certainly not doing you or your family any favors. Not only is it a financial drain (remember, most of your payment is taxes and interest, not principal) but everyday that it bakes in the Texas sun is dollars out of your pocket. The roof gets old. Termites get in. Who is cutting the grass? The city? That’s a $350 lien.
I know it can be a tough situation and you can feel overwhelmed or even angry that things didn’t go the way you wanted but the honest truth is your best option is to talk to someone, get some help and figure out a way to move forward. Like I said, I see this all the time and I’m happy to help whether we can buy the house or not.
While the above methods cover the majority of folks there are always exceptions. Regardless of the situation I encourage you to reach out on the web or give me a call. I am local in Killeen (not some big company) and can give you an honest, free assessment and personally walk you through your options. Honestly, I can’t promise the news will be great but I can promise to try to help in any way possible.