Peoria house tenant is leaving
July 23rd, 2008 by KenricI got a call from my tenant today at my Peoria rental home telling me that they will be moving out at the end of August. My tenant was on a 6 month lease that ended in April and have been going month to month until now. They found a house with a pool that is doing a rent to own. I have to remind myself to tell you a tenant story. I didn’t want to tell it until they moved out.
Now I have that decision again, re-rent or sell?
I haven’t followed the market up there in the past few months, but I’m going to guess that it’s not any better and its probably worse than last October when I was trying to rent it. This home has a large negative cashflow and is worth barely what I paid for it. The good news is that the loan is a 30yr fixed at 6.xx%. I need to decide on whether I want to keep this for the long haul or dump it at a loss. I don’t feel there is an in between for this home.
I’m going to toss a few craigslist ads up and see what the response is like.
Posted in Real Estate | 
Stumble it!
By throwing some ads on craigslist, it sounds like your leaning toward renting. Do you advertise it as being able to rent it on a month to month basis?
By Tucson Seo on Jul 24, 2008
I’m seeing how the rental market is right now while I research the home’s value.
By Kenric on Jul 24, 2008
With gas prices so high, the values in North Peoria continue to decline. At least there is not much on the market with over 3,000 sf and a three car garage. There is an Engle foreclosure in Westwing at $274,550 and someone is trying to short sale a Pulte with 3,421 sf for $349,000. The owners of the Pulte have followed the market down for a year. The sales since May 1 are all Pultes in Westwing, and they are from $320,000 to $361,000, with one short sale at $400,000.
Asking rents for Westwing/Vistancia are $1,500 to $1,700 for 3,000 plus sf and a 3 car garage. I would guess you have a negative cash flow at that rent level.
Long term, that area has a lot of potential. It has a lot of natural beauty and it should compete with North Scottsdale - with an easier commute to the West Valley. The question is, is it feasible to wait the market out? Are there alternative investments that will provide a better overall rate of return, even after you take the loss? It’s a tough call to make right now.
By Another Investor on Jul 24, 2008
Hi AI,
Thanks for the write up. It’s pretty much what I’ve figured. I also share your views on long term in Westwing. It certainly has a high end feel within the community and they are making huge strides in community development there.
The $349k short sale is the same model as my house. It’s a few doors down and I actually walked through it while it was being built. My guess is that they are taking a $100,000+ short sale loss based on the upgrades in it. It’s disturbing that it hasn’t sold. It doesn’t give mine much of a chance then since its a better home (unless its all torn up inside now).
The question is can I ride out the negative cashflow? Yes I can. If I sold now I would take a loss and basically leaving closing with no money exchanged. So the issue isn’t what I could do with the equity if I sold because there is none, it’s what could I do with the negative monthly cashflow money.
By Kenric on Jul 24, 2008
The price on the one down the street was just dropped a few days ago. In fact, the asking price was dropped three times in 10 days. The foreclosure wolf must be at the door. The co-broke was at 2 percent, so I’m sure the agents did not bother to show it. Who wants to be bothered with a short sale with all the short sale problems for 2 percent? The co-broke was just raised to 3 percent. With the comps where they are, the new price, and the more attractive co-broke, it should sell.
There’s a smaller one-story across the street, another long-term short seller, listed at $299,999. It looks nice, but has a tandem garage. The comps say $100/sf, or $265,000.
If I could walk away from the table with nothing owed, I might do that. Invest the monthly negative, and buy another house in the area in a year or two. Prices will likely continue to decline. As long as prices decline more than the transaction costs and financing is available at reasonable rates, you would be better off.
We are all making difficult investment decisions these days. Too bad hindsight (instead of foresight) is 20/20.
By Another Investor on Jul 24, 2008
Hang on to that badboy!
Not sure what you are negative on that, but rents will rebound before values do. In the mean time you are paying down the mortgage, so while you are negative cashflow, you are paying down principle.
Having a 30 year fixed at a great rate will seem like a genius move in five years - especially with inflation. Suck it up and ride it out. :)
Of course you should have sold a year ago, but thats water under the bridge. Look where you are now, fighting in a distressed market. You are in a good position to weather the storm, dont sell the boat now.
RealOG
By RealOG on Jul 24, 2008