Torn on what to do with a rental property we own and since the Bunk is all knowing and many smarter than me, thought I'd post to the board.
We purchased a property 3 years ago with intentions of holding it long term. Tenants were in it at the time of purchase, a veteran and his wife. It's not a great house, but they love it and weren't in financial position to purchase at the time. They also take care of almost every issue without calling us. We even redid the kitchen last year and all we did was purchase the material. They did all the work themselves. However, we don't make a ton of rent(maybe $300/mo) because they can't afford to pay what the market would allow us to set it at so we have been on the low end of the range for the area pretty much from the time of purchase.
Fast forward to this summer they came to us wanting to purchase. They sought a lender through a VA loan, but had work to do on their credit. They got approved last month, we agreed to a purchase price and ball was rolling. Part of the agreement on the purchase price was increased a little higher bc they had minimal money on hand and asked if we could cover closing and we agreed. Unfortunately we drew a prick for the appraisal(based on how he treated everyone he dealt with) and he set it at 20 less than our purchase price. We've gone back to tenants and they have almost nothing to put towards closing, so double whammy on us right?
We refi'd for a better rate and already got what we put down on it, plus 15k out of it. We planned to clear another 100, but this will drop us to basically 80. We could hold it and increase rent maybe another $200-$300, but doubt they could afford to go any higher. We're torn because we really hate to do that to a vet. He does a lot of work with younger soldiers still at the post where he served.
So hold it and hope it continues to increase in years to come with minimal monthly profit or sell at less than what he hoped and use that for another opportunity? Admittedly we're torn more due to the tenants and wanting to do a good thing, but should that trump what we purchased it for, our own gain?
We purchased a property 3 years ago with intentions of holding it long term. Tenants were in it at the time of purchase, a veteran and his wife. It's not a great house, but they love it and weren't in financial position to purchase at the time. They also take care of almost every issue without calling us. We even redid the kitchen last year and all we did was purchase the material. They did all the work themselves. However, we don't make a ton of rent(maybe $300/mo) because they can't afford to pay what the market would allow us to set it at so we have been on the low end of the range for the area pretty much from the time of purchase.
Fast forward to this summer they came to us wanting to purchase. They sought a lender through a VA loan, but had work to do on their credit. They got approved last month, we agreed to a purchase price and ball was rolling. Part of the agreement on the purchase price was increased a little higher bc they had minimal money on hand and asked if we could cover closing and we agreed. Unfortunately we drew a prick for the appraisal(based on how he treated everyone he dealt with) and he set it at 20 less than our purchase price. We've gone back to tenants and they have almost nothing to put towards closing, so double whammy on us right?
We refi'd for a better rate and already got what we put down on it, plus 15k out of it. We planned to clear another 100, but this will drop us to basically 80. We could hold it and increase rent maybe another $200-$300, but doubt they could afford to go any higher. We're torn because we really hate to do that to a vet. He does a lot of work with younger soldiers still at the post where he served.
So hold it and hope it continues to increase in years to come with minimal monthly profit or sell at less than what he hoped and use that for another opportunity? Admittedly we're torn more due to the tenants and wanting to do a good thing, but should that trump what we purchased it for, our own gain?
