I am back at the hull after being away for a whole week. There are a lot of things to get done and as hard as I work, there’s always more to do. Last week, I am afraid, Aspire to Grace was sacrificed in the interest of staying ahead of this tidal wave rolling through.
In the last two weeks, I have had a business trip to prepare for and was gone for four days. I have also started the move out of my office. I am in the process of transferring files to an external hard drive that I can take with me when I move. In another post, I will talk about the remote storage service I will be using called Mozy. It is a great way to secure files against damage or loss to your computer or other physical hard drives.
Finally, I also traveled to Gulfport, MS last weekend and found a place to live. Our unofficial move date is July 17. In an upcoming post, I will let you know what I encountered and how I ultimately was able to find a good deal on a lease. So, stay tuned.
Modified Theme for Mondays – “Money Mondays”
I have come to realize that there are a lot of interesting things to discuss that relate to money that don’t necessarily have to do with making money. For example, this week, I’d like to share with you some additional insights related to the rental of my property, on which I intend to make money. Next week, for those of you that may be moving to a new location, I’d also like to discuss tips on finding a good deal on property for lease in a short period of time.
While I am still mostly motivated by activities that can make me money, sometimes I would like to focus my discussion on other interesting money-related issues, such as ways to save money. After all building wealth involves simultaneously making more money while spending less money.
So, I am modifying the theme for Mondays. From now on Mondays will be “Money Mondays” instead of “Make Money Mondays.” It just seems like a better fit. Please also let me know if you have any other suggestions for money-related content.
Rental Property Conversion Series: Property Has Been Listed, Now What?
My agent listed my house as a rental on the realtor’s database about three weeks ago. Since then, we have had a decent amount of traffic inquiring about the property, but no applications have been submitted. There are likely a number of reasons, but the greatest concern cited by prospective renters has been security in the neighborhood.
I live in an area of the city that has its share of crime, much like many other urban locales. There are very few, if any, areas of DC where crime is non-existent. In fact, even most of the affluent areas are within a one or two block radius of a crime hotspot. Whether it be a drug spot, a spot for prostitution, or an area with a high incidence of robberies and burglaries. You would be hard-pressed to find an area of the city existing in a vacuum immune to crime.
When I bought my house, I recognized that it was in an investment area. My research of this area before I bought my home indicated that it had specific plans for development and it was within 3 blocks of a commercially and residentially affluent area of the city. When I bought my house, there was a $650,000 difference between the price I paid for my house and some recently renovated homes 3 blocks way. These things were catalysts for my decision to invest here. Even taking into account the differences between the houses in terms of features and space, when considering the pattern of development, it seemed pretty likely that the location of my house was slated to appreciate significantly within a short period of time. Six months after I bought my house in 2004, it appreciated $50,000.
As an investor, I expected and accepted the edginess of the neighborhood coming in. But, I must remember that I came in at a lower price so my level of tolerance was much higher. As a higher priced rental unit, however, it understandably does not lend itself well to lower tolerance levels. This is demonstrated in the reluctance I am seeing from prospective renters.
My agent listed our property on the MLS real estate database, as well as Craigslist. I even went a step farther to list our property on the military housing database. Now, three weeks later with no submitted applications, my husband and I are reconsidering whether to sell, or at least whether to put the house on the market as a sale simultaneously with our rental listing. Another factor in our consideration is that our neighbor, who listed his house at full appreciation value, saw a contract for sale on his house within a week.
One of the reasons my husband and I chose to put our house on the rental market is that market indicators showed that the appreciation value on our house had fallen as of the end of last year in the wake of the economic downturn. So, we decided that we would convert it to a rental property in the meantime and wait for prices to bounce back. Now, market indicators are showing that the value of our property may not have fallen as much as we previously thought and that property values have recovered somewhat in many areas of this city.
Now, although there are a few things that will need to be done before listing our house for sale, we have decided to do a sale listing simultaneously with our rental listing. This basically would mean that if we get a credible lease application in the near-future, we will gladly accept. But, in a few weeks time, we now plan to list our house for sale. Thus, if we get the opportunity to sell our house at an acceptable price, we will move forward instead to sell the house.
In the event that we sell, we would take a bit of a hit from the expenses that we put into preparing our house to rent, such as the refinancing costs. But, in the alternative, if we don’t sell, we could still take a hit from having a vacant property. We’d end up paying a mortgage here and rent in Gulfport. So, it may come down to a lesser-of-two evils situation. Ultimately, even if we take a hit on expenses by selling, we would still profit if we sell at or near our target price.
Who said real estate wasn’t a gamble?
MAKE MONEY MONDAYS is a forum to discuss ways in which you can create additional sources of income. I try to focus on particular ideas and steps you can take to create alternative income and passive income sources. I have also begun a series of posts called “Rental Property Conversion.” This series follows my husband and I as we turn our property into a rental property. I will also research and post other useful information in this category. If you like what you see here, please use the orange icon at the top right to receive my content updates by email or RSS reader.