Real estate/building question (long)

[downtoearth]

So we still own our first house.  It's a rental in another state and rented out by friends for the past 3 years, so it's been easy - they manage themselves and when they have to, we give them a deal on rent that month.  We have it about 35% paid off from our original loan and if you take current prices into account we have about 45% equity into it.  We were planning to let the renters keep paying our mortgage for the next 10-15 years.  I had sort of imagined keeping the place and it would be our vacation/retirement home later in life.  Or if we needed the cash, we would sell and have $$ for retirement.  Ideally, we could have two houses and visit friends and live there part-time after kids start heading to college - my work could easily move back to that state at any time (it's only 1200 sq ft, so more for a couple than our 5-person family).  Or DH and I sometimes dream about razing the little brick house and building a small, modern house on that awesome location. 

Our area is desirable and we have a larger lot (corner).  However, we keep getting solicited to sell - have had our old realtor call 3 times b/c they have people looking in the area and one offer a year ago-ish.  Now we just got a random letter in the mail from someone who wants to buy our house/property.  They don't care about condition and haven't ever been in the house.  They just found our location desirable and have $$. 

DH and I are torn.  I don't want to know how much they'd offer b/c I might be tempted and I like the idea of keeping that house/location.  DH thinks we should call ASAP and sell no matter - he is glad that they would take it without any repairs (we think they want the property more than the house).  It needs about $10k in foundation work to make it awesome, but we could fix for $5k and sell if we wanted.  If we were buying now and not 9 years ago, we wouldn't be able to afford in the same location. It basically costs us about $1k in taxes each year and $500 in other bills, but the rest of the expenses are covered by the rent. 

Would you consider selling or keep for future use? 

Here's the house for fun:

[bunnymendelbaum]

Is the area likely to stay desirable? (Meaning both it will likely keep gaining in value and you will keep wanting to eventually more there?)

[boiler717]

This is so tough. We have a rental, put it on the market for a bit, then pulled it off. I think long-term it will be good to keep, but the cash is tempting.

Have you met with a financial planner?

[downtoearth]

Jan 3, 2014 14:44:10 GMT -5 bunnymendelbaum said:

Is the area likely to stay desirable? (Meaning both it will likely keep gaining in value and you will keep wanting to eventually more there?)

Um, yes, but the current house is only 2 bedroom, 2 bath with a bonus room in the basement, but the basement needs to be taller to be functional (6'ft so a modified basement/crawlspace that is great for a kids playroom and the washer/dryer and storage, but not much else.  I guess, that is to say that this house is going to reach a ceiling b/c it's only 1200 sq ft, but the lot is big for the area. If we popped the top or made the basement a full 8-foot, it would increase significantly b/c we could have more beds/baths.  A 3+ bed, 2 bath would be way more valuable IMO.

Here's some info on the neighborhood: Denver's Highland neighborhood (not to be confused with Highlands Ranch) is a cove of cozy restaurants, novelty stores and martini bars just outside the bustle of Downtown Denver. Demarcated by W 38th Ave., Zuni St., W. 32nd Ave., and Federal Blvd, the neighborhood has always been known for its ethnic diversity since its founding in 1858. Home to Scottish, German, Italian and English immigrants during the 19th century and recently by its Spanish-speaking population. Remnants of Highland's motley history are apparent in the Scottish and Spanish street names, and historic landmarks like the mission-style St. Patrick's Cathedral. Highland's quaint architecture, characterized by exposed brick walls, winding staircases and other whimsical attributes of Victorian architecture, has made it a sought-after destination for young families and LoDo business professionals. Recreational parks with youth baseball diamonds, basketball courts, flower beds and picnic benches complement the area small neighborhood ambiance.

Here's an idea of the value in the past 13 years:

[downtoearth]

Jan 3, 2014 15:24:17 GMT -5 boiler717 said:

This is so tough. We have a rental, put it on the market for a bit, then pulled it off. I think long-term it will be good to keep, but the cash is tempting.

Have you met with a financial planner?

Nope, I've never met with a financial planner.  I talked with one once, but they were selling their own funds and I didn't like that guy, I'm guessing ones you pay to see would be better, right?

[msmerymac]

I think this all comes down to personal preference.

If you're spending roughly $1500/year, I say keep it. Eventually you'll have a paid off house. If you NEED to sell in the future (kids' college education, retirement, change of living situation plans), then you can do it later... when you have even more equity, and when the property is worth more. Let's put it this way - unless disaster strikes, in 30 years, the house WILL be worth quite a bit more than what you paid for it.

I will admit that my husband and I plan on possibly doing something similar with our current 3 bedroom, 1400 square foot house. If we find ourselves pressed for space in the future and want a bigger house, we would like to rent out this one - and either generate income later in life, or move back into it when our kids leave home, or sell it 30+ years from now for a lot more than it could be worth today.

[mrspez07]

Being familiar with the neighborhood, I would say unless you need the money, wait and sell later. That area is only going to increase in value, and the size of the house isnt necessarily holding the value back. Consider places like Park Hill or Wash Park in Denver where theres been some scrapes, but many people loving the original houses or adding additions, popping the tops on a house similar to the size of yours.

Also, in addition to the practical side of things, how would you feel if you sold it, they developed it and other adjacent properties and built apartments? The letter you got is fishing for investment properties and was possibly sent to all your neighbors as well.

(I'm a historic house lover who also happens to have developers that pay my bills and keep me employed)