Cash Or Support Our Troops?
I own several rental properties in a military town - all good tenants, all military families.
Am considering selling one of these houses cause the market is very strong right now in this area and I have huge equity - plus I need some good cash for some new deals coming up.
The 2 houses that I would consider selling both have Marines that have recently returned from Iraq/Kuwait. The wives stayed behind and kept the houses rented, (many wives/families often move "back home" during times of war cause they don't know how long spouses will be deployed). My tenants stayed, I reduced rents and everything stayed rented. Fellow RE/investor-owners in the area had vacancies for much of 2003 until troops started to return.
(During Operation Desert Storm, this area was littered with foreclosures cause the troops were gone so long - this is the definition of a military town.)
So, back to my dilemma: I understand this town and have compassion for the military. And I understand that I should run my RE business as such. But I'm a sorry sap.
The 2 houses that I consider selling -
1) The marines living in each house will likely be transfered around August/September, meaning that they will be moving.
2) Market is strong now, would be ideal to sell now.
3) Rental market is overwhelmed by returning troops and vacancies are nil - if I booted my tenants, (month-to-month agreements), they would have trouble finding something to rent and added difficulty is that they will only be in town for another 6 months. I would basically be making their already difficult life hell.
Well, I just don't think I can boot them. I am a sorry sap. I might take a loss, I guess. But maybe the market will stay up until Fall. Ugh - But it is an election year.
Input?
Thanks,
Noel
[addsig]
Seems to me you have done a commendable job in making it possible for the families to have a home under difficult circumstances.
You've lowered the rent, and the boys had a place to come home to after a difficult and tough period.
It really becomes a moral decision again, doesn't it?
How far do YOU think you have to go?
In reading your post again, I think you have already made up your mind...
[addsig]
Yes, and in reading my own post again, I know what my perspective is.......I am an American before I am an investor. Greed be damned. Hah!
WOW... Very admirable. You still have to watch out for yourself. Still look for a potential sale. If the tenants are good and pay well, there are investors out there that will still but the property with a lease already in place. (even if it is not the "top" dollar rent). Obviously I don't know the cash flow on the property.
As in any real estate transaction, you can't let emotion rule the transaction. If you are willing to take a loss like that... you better somehow justify a deductable charitable donation. (if you figure out how to do that one... let us all know. lol)
Good luck..
FYI - Rents were returned to rental agreement rate when the marines returned, so I am currently receiving FMV rent.
Noel
You Know......Making money is making money, but sometimes you have to do the right thing. Maybe take a little profit instead of a big one, treat these people like you/we owe them for our freedom, because in the end, we do. [ Edited by plumzany on Date 01/29/2004 ]
If you are worried about your tenants being displaced change the lease to a 1 year lease with an out if they are transferred to a new duty station.
Noel,
Wasn't it you who said "Landlording ain't for pussycats".
Noel,
Make it a win - win. Extend their lease for 9 months and make any sale contingent on the assumption of their lease. I assume you would be selling it as a rental, in which case the purchaser would be happy to have it already rented.
[addsig]
New to this site, and this is the first post on this forum that I have read.
I have had rentals for about 8 years now, I'm a very small player, currently with 2 rentals, and that isn't likely to change very quickly.
All of my properties have been near military bases, currently in Kansas. I strongly believe in doing my part to offer a fair deal, and a quality property. Not that I'm such a great guy, it just makes good business sense to me.
I have read this one post and already feel at home on this site. Sounds like a great bunch of people here who share my mindset.
Why, you ask, have all my properties been near military installations? I've been in the Army 20 years, retire in 45 days, and am 2 weeks returned from a 10 month visit to Iraq. And to add to the fun, I close on a purchase in 31 minutes. Heh.
thanks,
Mykle
YES-Sell it or NO - Keep it is not the only advice/opinion one should have:
While it is certainly an admirable thing to help our sailors and their family in the time of war, keep in mind that being a soldier is for them what renting your properties is for you: A job form which you both make living. When the time come they would move without worrying what will happened with your property or your profit. After all, you are in business with them and the emotional part is the part of relation but should not defined it as being any different then it is. What I want to bring up is a picture form a business prospective of view, yours and theirs and in the end it will be up to you to decide:
Everybody got a job to do" and if I was you, I would certainly talk about situation with my renters and would see what they think and say before I make my final decision. maybe their needs are different form your perceived ones? Don't assume. Ask!
Anyhow, even if the market begins to deflate, I am convinced that it will not happened before election. And finally here is another option that I can suggest: Try selling it with condition attached that the marines are not moved before the fall. Giving the current sentiment, most everyone would like to do just that.
The key word and act is be - creative - or ... all you can be!
Thanks for all your input.
I like the idea of the lease to secure the tenants future. Surprised my little brain didn't fester that one up. So simple. I am used to spiffing up a vacant pad prior to selling - the vision of a crisp and clean place seems to signal top dollar in my mind. A good example of why I like this place - (keeps me on my ol' Pussycat toes........right Dave T?? haha)
And then noone mentioned what was my original plan - Keep the good rental property, refi and max cash out, no nasty taxable income.
Ah, well, at least I now have 2 options that I like. Fun stuff.
An occassional sap but never a Pussycat,
Noel
[addsig]
I just skimmed through the thread. But, if you were to sell the property do they have to get "booted". Wouldnt the new owner, if an investor, like that it is rented?
I hate to say that I agree with Omega1 but I do. except about the election thing. Anyway, what about your tenants would they be buyers? They might if they are carrer soldiers. or what if an Officer bought it. he wouldnt be going anywhere and you could feel like you did your civic duty to America.
[addsig]
Hey Noel2, it seems that you got what you needed to hear so in return, let us know how the story develops in the following weeks and months.
God bless America!
In response to an officer not being sent overseas that is not true. 95% of the people in the military are fully deployable. The other 5% are people waiting to get out are on medical.
Sounds like a tough decision for you to make. I am currently active duty Navy, I just returned from a 10 month depoyment in the Arabian Gulf. (I was on the Aircraft Carrier that President Bush landed on) I am also a real estate investor. I would let the tennants finish their time, but the moment one tennent left I would sell the property. Sometimes investing can be a hard thing to do but you have helped out more than most people would. So I thank you for that.
Oceanside, Marines at the base. Good rental area. Permanent Marine Corp base. No pending cuts life will continue.
Of course on Military Housing I always talk to the Base Housing Officer and in many cases they sometimes intrude to the point of practicaly managing the properties. In the Officer Corps there is an awful lot of moving around and some of the Officer and top three grade Lifers like to leave their families close to the base where there is medical assistance, and oh my god least we forget the PX. Cheap and good.
Wherever I went I bought off base housing and it was profitable. Interesting enough many military as they retire also like to be around the base. Some start their civilian careers around the bases. Employed on base or near by.
As I said I would talk to the housing officer. He always has a need for housing. Sometimes even visitor housing cause the base has a restricted number of units on base for persons assigned to short courses etc. And there you are. Might even as I did furnish a few and set up a small support base for management.
Remember if you are buying within the military community you are usualy picking them up with no money down and at a price way below market. You can afford to stay below market in renting.
In the last few years the overseas assignments are short about a year or so. In my time you might spend three years overseas and then usualy your family returned to their original homes. Nowdays on the short term tours. The families prefer to stay at a base with no disruption to kids schooling and I know it should not be mentioned, but the military like to keep the families close to other military, they look after each other while the service spouse is overseas. There are also some support funds available for assistance in renting, but that all comes from the base.
In my mind this adds up to a good return on investment and the military families usualy make great tenants and as one rotates out his buddy rotates in and takes his place. If your game plan is correct with the Base housing officer you should never go vacant. Besides do you know a better group of people to call on when you need a little maintenance problem solved. A broken pipe, a clogged vent. etc.
Lucius
Super idea with regards to extending their lease for 9 months and make any sale contingent on the assumption of their lease. I just wanted to say "good show" regarding all the accomidating you have done for these families. Not only did you have less of a vacency issue compared to other investors in the area, but I guarantee the word will get out that you're "military friendly" and you will be favored by military tennants. Good Marketing.... Very Patriotic... win/win situation if you ask me