Real Estate hell, what to do?

[Jims5543]

I will try to keep this simple and short.

- Sept. 2004 my off was destroyed by hurricane
- I moved to a little 15x30 room from a 1200 s.f. office
- lack off office space drive available prices way up
- Dec. 2004, I buy a house on a 4 lane road and move office
- Dec. 2005, City tells me I cannot have business there and force me to move out.

- I put house up for sale, house is still for sale.

I purchased the house a 2/2/2 on a corner lot for 189K in Dec. 2004. I listed it for sale for 249K in Dec. 2005 just for kicks to see if anyone would bite.

No bites, house has been reduced to 219K and I am about to drop it to 189K just to ge tout of it. I did not but it to flip it.

The city has been very uncooperative in all this, many place have zoning for Professional Residential this city does not.

Honestly, I have been renting it out and the tenant had junk cars trailer homes, old jet skis and trash all over the yeard, the house look 100X better when I had a business in it.

So now the house is empty. The tenant moved out.

What do I do?

Do I spend some money remodel the kitchen (it needs it bad) do the landscaping up real nice.

Or do I just discount the price for a big loss and try to get out of it.

I owe 150K on it putting 38K down on it. I am now loosing $1500 a month unless I rent it again and then I can only really rent for $1000-1200 a month.

Suggestions?

[motion]

Jim,

Only you know the specifics of your area and can determine the best course of action. Based on what you've said, it seems like the best route would be to rent the place at 1200 per month. I'm guessing your debt burden with taxes and mortgage is around $1100 per month? If you can break even on the place, wait it out until prices come back up, or treat it as a long term investment.

I absolutely would not recommend dumping more money into the place to sell it. If you're going to sell it, take a small hit now, before prices may get even further depressed.

Tough spot to be in. Best of luck.

[Jims5543]

We are still on the downside of the market here. Prices peaked and are now adjusting.... hard.

This house would have been scooped up 2 years ago for 219K but now its looking like I might have to drop to 189K and see if anyone bites.

I can get a huge discount on cabinates, my father in law manages a cabinate shop. Landscaping is cheap when you do it yourself.

I might have to drop about $2000 into the house to spruce it up. Then try to sell it at what I paid for it.

My debt burden with insurance, taxes and mortgage is $1500 a month. Insurance is high now because of the storms and the city is taxing these houses out of the market.

I really do not want this house, I do not consider it an investment. I prefer to get rid of this mortgage and the expense.

[Rot 911]

Jim if you want to sell it now, fix the kitchen, clean and paint the inside of the rest of the house. Clean up outside and then list it for $195K and be willing to sell for a bit less. Clean is what sells a house.

[dad911]

Originally posted by Jim Cesiro
........
I really do not want this house, I do not consider it an investment. I prefer to get rid of this mortgage and the expense.

Then drop the price, and dump it. Put your time and energy elsewhere, life's too short.

[bigchillcar]

what kurt said..

[Jims5543]

It recently recieved a fresh coat of paint outside and in.

My instict told me to clean it up real nice, update the kitchen landscape it nice and sell it.

Then a little voice in my head said this may be the wrong move, do not spend another penny on it, drop the price to a few grand below what I pad for it and unload it.

[bigchillcar]

the smell of fresh paint does seem to work miracles though, jim. especially inside the house. neutral colors that most anyone could agree about.

[Moses]

Don't do a major kitchen remodel. New owners will want to make it the way they want it, anyway. Spend your money on fresh paint and a cleaned-up yard. Clean sells.

[Porsche-O-Phile]

You can apply for a change of zoning, but it's typically a very lengthy process and depends a lot on how willing the city's planning department is willing to work with you.

If you want to pursue this as an option, I'd suggest consulting with a licensed architect in your state to assist you with this and to assess the feasibility.

[Jims5543]

Originally posted by Porsche-O-Phile
You can apply for a change of zoning, but it's typically a very lengthy process and depends a lot on how willing the city's planning department is willing to work with you.

If you want to pursue this as an option, I'd suggest consulting with a licensed architect in your state to assist you with this and to assess the feasibility.

The city will not budge. I was stupid to think I might be able to make this work. I traded some survey work with an Attorney and he pursued changing the zoning and they have a land requirement that I cannot meet without buying up 1 million in neighboring lots/houses and rezoning all of them.

I'll take some pics later in the week of the house and the kitchen. I really think the kitchen makes people turn and run.

I could probably resurface the counters and re-door the cabinates and surfaces for about $1,000.

Right now I am listed for sale with all the lots that are needed to rezone to commercial but some of the other owners are way out of line on price. If someone was to buy all 6 properties they would have to spend over 1 mil. which is crazy. The owners of the vacant land are asking more than I am for the house which is killing the possibility of a deal being offered.

[JeremyD]

What are prices selling for in the immediate area in the past month or so? Get a few realtors from the immediate area and ask them what they would price the property to move it? Use that to set your price - it really doesn't matter what you paid for it - or what you could have gotten for it -

If you could break even for another year or even e a little behind - I would recommend renting for one more year and waiting it out, especially until the spring.

[930addict]

(disclaimer: I'm on three hours of sleep so if this makes no sense....)

Hey Jim,

Couldn't you live in that house, give a different address for your business (friend or relative) and have a PO box for the business mailing address? Then just wait the market out?

[Jims5543]

I have a house already, my big mistake was putting my occupational license to the house. If I had used something else like rented an address this would never had been a problem.

Some worker in the Cities Occ. Lic. dept. drove by saw my trucks parked out front. Ran the company name and came up with my Occ. Lic. then came down on me with threats of fines. I had to go before the City council for a hearing and was oprdered to vacate the house or be fined. They gave me 48 hours to vacate.

Which made me build a office in 4 days.
Operation new office in 4 days

If I had been dishonest I could have used a different addy and they would be powerless to do anything.

I guess another option is to rent it and wait for the market to pick up.

[turbo6bar]

What is the reasonable floor for housing prices in that area, and account for the increased cost of insurance in the past half decade. If that floor is well below your basis, get out.

If you are not interesting in holding this property as an investment, then don't let it be your escape plan. The negative cash flow just means another thing on your mind, not to mention the -$6000/yr it costs you out of pocket. This also assumes 0% vacancy rate and tenants that are angels.

I'm all for investing in RE, but this one just doesn't pass the smell test. If you told me you were prepared to hold this one for 10 years, then I might change my tune. Anything less than 5 years is a death sentence, IMHO.

Hope I do not offend.
jurgen

[bigchillcar]

two more words that sell: "curb appeal".
ryan

[JeremyD]

People are still moving to florida to the tune of 400,000 a year. Not the same amount of people coming to Oklahoma City.

[turbo6bar]

Fair enough. I started it. I will edit my post.

[nota]

is it legal to sell to a dummy CORP you own
with a re-fi at 100% current value
and walk/run [actualy] away
and let them re-po it

[tiwebber]

Many comment that renovations do not pay for themselves. Here's one clip from the web.

According to Hanley-Wood LLC's 2004 Cost vs. Value Report, homeowners recouped:

85 percent of the cost of an upscale bathroom addition when they sold their homes, and 90 percent of a more modest one.
80 percent of the cost of an upscale kitchen renovation, and almost 79 percent of a more modest one.
76 percent of the cost of a basement remodel (including large entertainment area, full bath and one additional bedroom-sized room).
about 77 percent of an upscale master bedroom suite, and 80 of a more modest one
86 percent of a deck addition

Personally I like landscaping and puttering around the house, oportunistically upgrading and fixing things when I can get raw materials cheap. If I was stresseed and/or in a rush I would get out quickly if affordable.