Creative Ways to Bring in Money If Your Home is Not Selling

I am getting 2-3 calls a day from owners of property that can't sell their home. Some of these homes have been on the market for 3 months, 6 months, and even 12 months or more. As most of you already know, the market is extremely challenging for selling homes. It's a buyers market, with many areas of the country offering homes for 60% less then what they sold for 2 years ago. Many people are now upside down on their mortgage or break even. Even if they are break even, after factoring in a 6% or 7% commission to a real estate agent, have found out they are upside down and have no cash to cover the difference.

What can you do if you have to sell your home, want to save your credit, but still need to move to a new city or a new home without selling and loosing tens of thousands of dollars? It's something I have called the Real Estate Triple Play. What is the Real Estate Triple Play? It's setup in the following way:

1)Offer your home for sale like you currently have it listed
2)Offer your home for lease option sale
3)offer your home for rent

Depending on your local MLS system, this will effectively double or triple the exposure of your home in your marketplace. At a minimum, your home will now be marketed as at least for rent and for sale, both of which will be pushed out to Realtor.com and other real estate related websites. Look at www.MyIndianapolisHome.com for more information on my marketplace.

How does this benefit you other then the added exposure?

If you have means to support it, rent out your home for 2-3 years until the market recovers. I have had people call me that have moved out of a city and their house has been sitting empty for 12 months! Imagine what $$$ would be in their pocket if they had decided to put their home up for lease or lease option? If their payment is $1,500/month, that would have been $18,000 more money in their pocket! Also, let's say you rent your home for these 2-3 years until the real estate market starts to recover. When the market recovers, you will be able to sell your home for the price you originally may have wanted to sell it at. Let's say you have a $250,000 home that you have dropped the price on by $30k and it's still not selling! So, On top of the $18k in your pocket after one year, you then sell your home in 3 years for the original selling price, that is another $30k in your pocket. So, after renting your home for just one year and selling in 3 years, you have put $48k in your pocket, all by renting your home instead of selling into a down market. Another option would be lease option the home, something I will write about in another article.

What are some keys to making this work right?

1)You need to have a professional property management company in place to manage this property for you. If you do not have experience renting out your home, you must do this or you will more than likely get burned trying to manage it yourself. Most home owners do not have the experience or knowledge to know what to look for in a tenant, how to run credit, verify employment, W2's, etc. How many of you want to take a call at 2am to fix a frozen water pipe? Oh, and you live 5 hours away? This is where a professional property management company comes into play.

2)You should have at least 3-6 months of reserves sitting in the bank in case something happens with a tenant, as well as the time it takes to find a tenant. Typically, at least in my marketplace, we are getting homes leased within 45 days. Different areas of the country will be different, and it will also depend on how aggressively marketed your home is.

What additional benefits do you receive for renting your home out right now?

1) depreciation expense: Say your home is worth $250k. The tax man lets you write off this over a 27.5 year period. So, each year, you get to write off approximately $9,000/year. If you are in the 33% tax bracket, you just put $3,000 in your pocket.

2) principle pay down: You pay down principle each time you make a payment. Lets say you are paying down the principle by $125 for each payment. After one year, you would have paid down $1,500. You don't see this money now, but when you sell it, you will. Do this for 3 years, and that's another $4,500 in your pocket.

Put more money in your pocket now and sell your home later for a profit!