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Better to keep & fix or sell and lose money?

I have a home in a much sought-after area of the city of Peoria, but it has issues that need repair that I have not been able to find one contractor in 7 years able to or willing to want to repair for thousands of dollars I've saved. I know how to make the repairs and would do so myself but have recently been seriously injured and had a major surgery that requires a long recovery.

The house is paid off, but what I paid for the house 5 years ago will not be what it sells for, even though I have already put thousands of dollars into the home and it would be a great investment for someone who wants to use it as a rental and is able to make carpentry and drywall repairs.

I want to move into a "move-in ready" home that is about the same size (1300 sq. ft.) within a 15-mile radius of where I am, but I don't know whether it would be worth it.

Would it be better for me to keep the house and wait until there are people willing to do physical labor correctly for money to come back to the area or should I look for a "move-in ready" house that I can buy for less than what I bought my current home for? In your experience, is it better to take a financial loss to get into what you want (which is what I thought I got) or to stay where you are and keep spending money trying to get what you want?
  • April 26 2013 - Peoria
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Answers (1)

I'm sorry to hear about your injury and health situation but glad that you're on the road to recovery.

This is an interesting situation.  To me, it makes sense to get some current bids from a couple of contractors and see if you can afford to make the much needed repairs that you mention in your post.  You might be surprised; I have an excellent contractor that has performed several rehabs for my clients over the past two years, and his prices are very reasonable and the quality of work is excellent.

If it's truly only drywall and some carpentry repairs, I can't see it being several thousand dollars, but I suppose it depends on the extent of the damage.  If there are underlying issues that come up once the repairs are being made, that of course will increase the repair total.

The most pressing question is: what will your home sell for in it's current condition?  Obviously not as high as it would if it were in good shape (not needing any repairs).  That being said, I'm very confident that an investor would purchase it IF there was enough margin for a 'fix and flip' OR enough future value for a long-term rental.  We're in a true 'seller's market' right now with low levels of housing inventory throughout the Valley.  This has created a shortage of good investment homes for both the 'fix and flip' and 'buy and hold' investor.

Note: IF your current home is indeed in poor condition, it's quite possible that it might not be able to be financed by a VA or FHA loan unless it's a 'rehab' loan.

I think you need to ask some questions of yourself to determine what's best for you in the coming years: do you plan on staying in AZ for many years? Will you be financially able to purchase another home?  Do you want to take on a new mortgage (unless you would be paying cash)?

Depending on your long-term plans, it might make sense to take advantage of the current market prices and rates and purchase another newer home that is in good condition and then either (a) sell your current home now for whatever you can get and either put that money in the bank or put it as a down payment toward your new home OR (b) keep your current home as a rental property which would bring in some monthly income and help you with your new home purchase.

I would look at what homes are available in your desired area and what they're selling for now, and look at the recent comparable sales to try and determine what your current home would sell for.  Given that knowledge, you'll go a long way toward making the best decision for you.

Hope that helps to answer your question!  Feel free to post additional info or questions if you'd like more help!

Jim Mitchell
Realty ONE Group
  • April 26 2013
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