Discussion:
Sell or Rent
(too old to reply)
$cott
2006-04-17 05:04:40 UTC
Permalink
I am looking to gather as much opinion for a client that undecided on
what to do relative to her intent to build a new home. She currently
owns two properties (with mortgages; one she lives in and the other she
rents out) and doesn't know if she should:

a. Rent out the two units and finance the construction of her new
home.
b. Sell both of the existing properties to fund (in cash) the
construction of her new home.
c. Sell one of the existing properties and rent the other and finance
the construction of her new home with a larger then normal down
payment.

What would you do (and tell me why)?

Please assume that the all conditions are ideal, i.e., she can rent out
both properties for a positive cash flow, she has the werewithal to
carry the third mortgage, etc. when sharing your opinions.

Thanks for all the input in advance.

Regards,
d***@yahoo.com
2006-04-17 17:15:46 UTC
Permalink
Well,
It is difficult to say what your client should or should not do in this
situation.
Having the two properties as rentals can be advantageous. The positive
cash flow would be good, as well as having the properties appreciate
over time. Over the long-haul, real estate can be an excellent
investment.
As far as carrying the mortgages, one could argue that borrowing money
through a mortgage is a very cheap way to borrow.
If she's comfortable holding all that debt, then renting the units
would be a good way to go.
But, many people firmly believe that if you can buy a house with
cash(or mostly cash) and NOT have a mortgage, that is a smart move.
It really depends on one's exact financial situation.
If it were me, myself, I'd sell both properties and put the cash into
the new construction.
Your client can always buy rental units at a later time.

Darren
Realtor in NY
a***@yahoo.com
2006-04-18 08:56:31 UTC
Permalink
Post by $cott
I am looking to gather as much opinion for a client that undecided on
what to do relative to her intent to build a new home. She currently
owns two properties (with mortgages; one she lives in and the other she
a. Rent out the two units and finance the construction of her new
home.
b. Sell both of the existing properties to fund (in cash) the
construction of her new home.
c. Sell one of the existing properties and rent the other and finance
the construction of her new home with a larger then normal down
payment.
What would you do (and tell me why)?
Please assume that the all conditions are ideal, i.e., she can rent out
both properties for a positive cash flow, she has the werewithal to
carry the third mortgage, etc. when sharing your opinions.
Thanks for all the input in advance.
Regards,
I say rent and use the bank's money to leverage the new construction.
It's better to have equity (average of 6 percent a year since 1968) and
inflation of 3 properties working for you than of one or two.

Regards...
Ryan Dean
2006-06-16 18:06:26 UTC
Permalink
[This followup was posted to alt.real-estate-agents and a copy was sent
to the cited author.]
Post by $cott
I am looking to gather as much opinion for a client that undecided on
what to do relative to her intent to build a new home. She currently
owns two properties (with mortgages; one she lives in and the other she
a. Rent out the two units and finance the construction of her new
home.
b. Sell both of the existing properties to fund (in cash) the
construction of her new home.
c. Sell one of the existing properties and rent the other and finance
the construction of her new home with a larger then normal down
payment.
What would you do (and tell me why)?
Please assume that the all conditions are ideal, i.e., she can rent out
both properties for a positive cash flow, she has the werewithal to
carry the third mortgage, etc. when sharing your opinions.
Thanks for all the input in advance.
Regards,
How does she generate income? Does she work?
--
Ryan Dean
REALTOR, SOFI, HCOA
American Way Real Estate
710 S. Jefferson Ave.
Cookeville, TN 38501
***@American-Way.com
www.RyanDean.HomesandLand.com
Direct (931)529-1712
Office (931)646-4010 ext. 2160
Fax (931)858-5570
Just sayin'
2013-01-15 11:06:14 UTC
Permalink
Personally I would choose b. My decision is based on the fact that I prefer to live debt free and although you can hope and pray that conditions will stay ideal it is always better to be prepared for the worst while hoping for the best.
Post by $cott
I am looking to gather as much opinion for a client that undecided on
what to do relative to her intent to build a new home. She currently
owns two properties (with mortgages; one she lives in and the other she
a. Rent out the two units and finance the construction of her new
home.
b. Sell both of the existing properties to fund (in cash) the
construction of her new home.
c. Sell one of the existing properties and rent the other and finance
the construction of her new home with a larger then normal down
payment.
What would you do (and tell me why)?
Please assume that the all conditions are ideal, i.e., she can rent out
both properties for a positive cash flow, she has the werewithal to
carry the third mortgage, etc. when sharing your opinions.
Thanks for all the input in advance.
Regards,
--
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