Friday, July 30, 2004

Selling the house

I’m picking up this story at the point where my renter’s two year lease has expired and they have opted not to buy the house. This is actually what I want, since I keep their option money ($4K) plus still get the house. Their contract was to buy the place for $125K and I think I can sell it for at least $135K now.

(I’ll go into the details of when I first bought the house and leased it later on.)

I was thinking about re-leasing it on another lease-option, but decided not to. I had just been in a car accident, so I had bills from that, plus had some other bills I wanted to pay off. It’s pretty much exactly like the Cashflow game – selling a house to pay off debt. I figure paying those bills will increase my cashflow by $500 a month. Of course, I lose my passive income, but I’m ok with that. I was getting $260 a month, so by paying off debts, I’m $240 ahead each month. I plan to save some of the proceeds to invest again later.

Because I’m selling for cash, I can’t do a 1031 exchange and I’ll be hit on taxes for the capital gain. I don’t like this, but I’m going to do it anyway. Gotta meet with my CPA and figure out an estimated tax payment to avoid penalties next April.

Checked out the house. Lots needs to be done. Range can be cleaned, but dishwasher is a lost cause. Full of mold. Ugh. Walls are dirty, grease stains are on carpet, baseboards are coming off, light bulbs need to be replaced. On the plus side, they installed an alarm system from ADT, so that’s a plus for selling. They beat the hell out of the house. But then, I figured they would, so it’s not a huge shock. I estimate about $3K to fix it up.

Had a company come in and do some cleaning. They cleaned the range up pretty well, but it’s still not too good looking. Went down to Home Depot and bought the cheapest dishwasher ($179) and range ($279) they had. Free delivery and, since I opened a Home Depot account, I have no payments, no interest for 1 year. I’ll pay this off when I sell the house.

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