Ok, want to run this by the geniuses on this blog:
My wife bought a condo in Phoenix area in 2005 (worst timing ever) at $160,000. We did some very nice remodeling, two new bathrooms, new kitchen counters, etc. and new appliances throughout. (mentioning this because maintenance/repairs SHOULD be very low for a while)
Anyhow, the market tanked BAD here and the condo was probably worth appx. $65,000 at one point. I think it would possibly sell for about $100,000-110k right now. We owe about $158k or so on the condo.
I have my cousin renting the place for $800 a month. Market rent is probably around $950 for that condo.
Problem is, the total cost per month is appx. $1185 (HOA, Mortgage P&I, taxes, insurance). Cousin has a very steady job and has lived there for about 4 years now.
The way I do my taxes, I estimated the impact of the condo to be a tax savings of about $2500- 3000 a year.
So, the back of the napkin math I have shows:
Cost: $1185 (plus any repairs)
Income: $800
Net monthly loss: $385
Net Yearly loss: $4620
Tax savings: $3000
Total net yearly loss: $1620
The condo is under my wife's name only, so if we foreclosed or short-sell, it wouldn't impact my credit, I believe.
So, from my estimations, we're only out about $1600 a year for now. In the future, rents will go up if my cousin moves out, etc... and the home appreciation in the area will continue to help... and in about 25 more years it will be paid off entirely.
Anyhow, so what are your thoughts-- should I keep it, try to do a short sale, or foreclosure? I'm pretty sure in Arizona that you can do a Foreclosure and they won't hit you with a tax bill for the difference nor can they sue for the difference (non-recourse)... but that may be different since it's a rental.
Please let me know if you are a Sell, strong sell, coin flip, keep, strong keep, or such. I'm probably a weak keep, since it is super low maintenance right now.
thanks!
D