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FortWayne
2011 Feb 10, 12:20pm
if you can refi to $1350 and get $2100 in rent then do that. Just make sure you can actually get the rent. There is nothing worse than having false hopes. It sounds like positive cash flow... but if you are hesitant than there are probably some concerns you have not mentioned?
If that doesn't work out, you can always do option 2 of all cash or foreclose depending on what you want to do with your life later on. Buying out or foreclosing are very final decisions you can't back out of, refi buys you time.
I don't know your financial situation, so hope that helps. Just don't leverage your financial security into appreciation of liabilities, thats what poor people do and end up staying very poor because of that.
joshuatrio
2011 Feb 10, 12:24pm
It's really up to you, if you think prices are going to fall much further, you probably should sell.
If you think prices have flattened out, refi and rent it.
inflection point
2011 Feb 10, 12:34pm
Option 3 - Rent the property on a daily or weekly basis to vacationers Enjoy it for a nice retreat for you and your wife together when you have time
Good Luck
PockyClipsNow
2011 Feb 11, 2:14am
Payoff home. If mortgage rate is 5% then you get an instant 5% return. Its a no brainer (assuming you have the cash).
You don't say anything about your long term plans. Do you really want to keep it for 15-20 years, if so the it would be very, very hard for depreciation to exceed rent in those time frames. Reno's almost 50% down already, it has to stop somewhere. Be very careful of the tax problems of changing a house from personal use to rental income then changing it back to personal use. It's complicated.
If you do go the vacation rental route, let me know if you want to do a house swap for a month. I'm possibly looking for a house swap (still looking at the tax implications, US tax rules suck, might not be able to do US for that long a time without a big, big tax hit) for next january. My beachfront mcmansion on one of the best surf beaches in NZ for something close to a ski area in the US or Canada. I really like Mt Rose, it's a rocking little area.
We bought a second home in a nice Southwest Vista's executive home neighbourhood in Reno in 2005. We came there to Ski mount Rose and to go to the lake in the summertime. The kids are in college now and we use the house only recently. We paid 780K for it in 2005 and have a 280K note on it (1750 a month). A very knowledgeable realtor last week estimated the sale price for a quick sale to be about 430 K :(
I have two scenario's in mind and neither one is an obvious winner but I would like the opinion of the forum:
Option 1: I can refi and lower my payment to 1350 a month, or pay off the loan with cash I have in the bank and rent the place for $2100-2500 a month. In this scenario I am afraid that the value of the house will still drop in the near future and my rental income will be wiped out by the house devaluation.
Option 2: I can sell the house fast to avoid any future devaluation and take my remaining cash to the bank in invest it into something that will make money. The fear here is that I am selling at the low point and that in a few years the value of the house will go up again as many californians might flee the state for Nevada when the avalanche of tax increases starts to weigh heavy on us.
Any opinions on either choice are welcome
Thanks.
Rik
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