Thursday April 5
Today is not too exciting of a day. Shephard Rd is coming along. The house is about 95% complete. Just waiting on the plumber and a few last items on the exterior. And that requires better weather than what we’ve had as of late.
The market is really good right now. So it is a great time to get it re-listed. However, there has been an interesting development. Tim and Shirley have a choice to make. Here are the details:A neighbor approached Bob and Fran about renting it while their house is re-built. They would need a minimum of 5 months and it is hard to know exactly how much longer than that they will need. (They unfortunately had a fire and need a place to live.) The insurance is willing to pay $4000.00/month rent, furnish the house and pay all utilities. So if they rent for the 5 months its 20k. I did do a cost analysis and found that it will be closer to 16K after they pay insurance, property taxes and yard maintenance over 5 months.
Here is my pro/con list as best as I can figure it:
- This comes out to a 6.5% return on their investment guaranteed.
- ROI will increase if more time is needed by the renters.
- They will still own the property. So there will be additional gains later when they do sell. (market dependent)
- It would push them into long term capital gains when they do sell.
- They can start marketing when they are given a 30 day notice, so the house will be occupied and therefore staged for free.
- We do not know what the market will be when they go to sell. It is possible the equity that exists today will not be there tomorrow.
- Everything in the home is new right now. It will not be new in 5-6 months.
So the question of the day is what would you do, and why? Give it some thought. And don’t be afraid to share your thoughts too! I know what I would do and why, but I am not going to share it now. Let’s see what the Riley’s decide!