What's up fellow SEMI buddy? What part of town are you in? I recently moved from the east side (Northern Sterling Heights) to South Lyon when I received a promotion at my company in Ann Arbor. I (pre-MMM) decided to rent out my home there (valued around 135k now, owe about 155k) and buy another one out here. Fortunately, I am able to receive more cash than my regular outlays and 9 months into the 2 year lease have not had a maintenance call yet. My hope is that in 15 months I'll be able to sell it without writing a check, hopefully to the current tenants who are interested.
Renting out a Condo is difficult in this market, but I have a friend who successfully did a small one in Clinton Township. He hired a company to do everything, and he just collects the check. I tend not to recommend this route (especially for the mustachian) on one home, but if you're timid about it it may be a good course of action. It sounds like you have a generous amount of cash flow so if you take a small burn, or breakeven you could ride out this storm and hopefully see some movement upwards and close that gap. Depending on what part of town you're in, this appears to be a very bullish year season for real estate. A house down my street just sold for $20k more than I paid in June, and it's smaller. My model sold a street over for $40k more and is awaiting appraisal. I did a quick look at listings for the area around my rental home and am seeing similar, but less magnitude, moves.
If I were in your shoes, I'd sock the money away in a reasonably liquid investment such as a money market. Sit on the sidelines for a year or two and see what happens to property values, they very well may rise in the near term, especially since Detroit entered the recession long before the rest of the nation. If you're looking to move, try to rent it out and continue to sock that money away to cover the maintenance expenses, which can't be that bad on a condo.
Best of luck!
Greetings Back! Currently reside in Livonia! And ss a matter of fact, I also grew up as an east-sider (eastern Detroit, and then Warren).
I do know that other Condo owners in the same complex (including neighbors below me with the exact same unit / floorplan) have successfully rented out. I'd be fine with taking a small hit on rent (I'd have to rent out the 2bd 2bath, 1022 sq foot for around 760 to break even), but would that really get me ahead?
I've considered renting, but it it is slightly intimidating due to time spent, liabilities, and dealing with renters.
Financially, would it be better for me to escape the place all together and just rent it out? or pay down the mortgage? or invest in other ways?
@James
Due to the ARM, I'm leaning towards paying down that mortgage. That ARM has some significant potential to bite me in the ass. But is it true that there is no collateral? How much of 'appraised value' impact the perceived value of a mortgage. In reality, I still have a place to stay, with 2 bedrooms and 2 baths, isn't that worth SOMETHING?
to further complicate things, refinancing is out of the question for a few reasons.
1) my FHA style loan, never got sent to the government, so now Flagstar Bank owns it. This was due to an error on Flagstar's part, and means I cannot do an FHA streamline.
2) since my loan is phsyically held by Flagstar, per above, and not backed by Freddie/Fannie, HARP is also out of the question.
3) since I am so underwater, I'd have to come up with around 80k in capital to do a traditional refinance.
pretty strange, huh?