If your goal is to be debt-free, what assets could you sell to catapult you out of debt? Rental houses are a great income, no doubt about that. But when you still owe on a rental and have personal debt besides you might want to decide wants more critical.
If you like being a landlord, then maybe this isn’t an option for you. If you become a landlord out of default, now’s the time! Turn That Rental House into a Cash Cow!
If you’ve been working your debt-free plan and trying to hang on to a rental property, have you looked at how much you could sell it for? We looked at ours after our last tenant, aka our daughter, moved out. Inventory is low, and you can expect to sell your house at a reasonable price right now.
“Even with rising mortgage rates and higher prices, economists say the market should remain strong due to very tight inventories and increasing demand as more millennials are projected to buy houses this year.” This advice from Norada Real Estate Investments.
We’ve been working on our debt-free plan for eighteen months. We haven’t been perfect, but we’ve made good progress. But last fall we had to put a new roof on the rental house. We cash-flowed what we could and borrowed the rest. It was an emergency we couldn’t fully cover. Since we’ve been working the baby-steps we were able to turn the emergency into an inconvenience.
Be prepared to work your butt off.
If you don’t know what sweat equity is, you’ll learn this fast. Generally, anything you can do yourself, rather than pay someone to do is where you’ll make your money. If you don’t know how to install a laminate floor, there’s always YouTube. Or find a friend that will help you do the work.
Not everyone’s a handyman (or woman) but if you can hold a paintbrush, you can do this. If you don’t know where to start, have a walk-through with your real estate agent. She’ll point out what you need to do to sell and earn top dollar.
Take notes as you walk through and ask questions. We asked for her advice on paint colors for the kitchen. Now isn’t the time to try that chartreuse green you’ve been thinking about. It’s not for you, think of the new buyer. Neutral is best; they can personalize it themselves later.
Put Your Baby-steps on hold
If your plan is to sell the house and pay off the rest of your debt, put your debt- snowball on hold. Continue to pay the minimums on your bills and use the extra cash to fund your project. You could increase your emergency fund for the unexpected call to the plumber when you can’t do it yourself.
Cash-flow the repairs
Use your walk-through notes to research your budget. If you can’t calculate how much flooring you’ll need, take your measurements to your hardware store and ask for help. Get advice on which flooring is easier to install for a beginner if that’s where you are.
Don’t skimp on paint, thinking you can get by with less. You’ll end up buying the extra can. And maybe another one after that because the big box store didn’t quite match the first one, and half your wall looks different. Just a bit, but noticeable.
You end up buying more and repainting the entire room. And just a tip, get a sharpie marker and label the can. Leave the can in the room in case you want to do touch-ups. It’s a pain to realize you just touched up the bedroom wall with the living room paint.
Set a deadline
Think of Stephen Covey’s 7 Habits of Highly Successful People. Habit 2 “Begin with the end in mind.” You’ve painted the bedrooms three times, It’s good enough. You want it perfect, but it’s time to accept it. Good enough is good enough. Finish the projects and clean them up. If you don’t have a deadline, you keep dragging your feet.
Set a date that you want to have it listed by. You can always extend it, but you need to have a goal to work towards. It’s too easy to think you have plenty of time and just put it off. When your date is the end of the first quarter, that’s still vague.
We set a date of March 15. We started working every weekend together and moved our deadline out twice. We’d still be where we were a month ago, thinking we had plenty of time. Set a date and make it urgent.
Now is a great time to sell your rental house. You can realize your dream and be debt-free. It’s a seller’s market, and demand is high. With a little bit of sweat equity, and determination you can create a dream house that turns that liability into a cash cow.
If you’re following the baby steps to get out of debt, put that on hold. Pay the minimum on your bills, and cash flow the repairs and renovations. Set a plan with a clear deadline and paint, paint, paint.