Author Topic: Sell my condo or rent it? Help a newbie  (Read 7324 times)

SCIGEM

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Sell my condo or rent it? Help a newbie
« on: September 22, 2013, 12:50:02 PM »
Hello All,

I am a newbie here and really need your help t wrap my head around this decision. We bought a 2/2 condo in 2010 (first home purchase) for 430K and recently refinanced it at 4%. The outstanding balance is 370K on it. the potential rent is 2300 to 2400$. The payment including the HOA is 2232+385. Condos are selling left and right in my neighborhood right now. We are located 5 min walk from a major university and one of the best neighborhoods for walkability. So there wont be dearth of renters. Condo similar to this size are selling for 460-470K although with a bit nicer kitchens. We will have to move out of here in the next 6-8 months due to our jobs. So does it make sense to keep this condo or rent it? My main concern was due to the rising rates- we may not buy another house right now. But does keeping this condo make sense in terms of leverage in the future for kids education etc or in any situation at all?? I would really like to hear from those who like to use low interest mortgage as a leverage tool for investment!! If not it does seem just a loss over all. Any insight from you guys will help a great deal!
Thank you!!!
« Last Edit: September 22, 2013, 01:56:04 PM by minukk »

SCIGEM

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Re: Sell my condo or rent it? Help a newbie
« Reply #1 on: September 22, 2013, 01:57:01 PM »
Hello...No one on the browsing right now? Please help with above scenario!

Thank you!

apennysaved

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Re: Sell my condo or rent it? Help a newbie
« Reply #2 on: September 22, 2013, 02:26:38 PM »
I have been a landlord for about 10 years.  I personally do not hold rentals that don't cash flow and based on your numbers, you will be paying out monthly to keep this as a rental.  You also need to consider vacancy & maintenance which means you would probably be spending even more out of pocket.

How far are you moving?  Long distance landlording can be tough.  If you have to get a property manager, then you will be further out of pocket.  I would definitely consider just rolling your equity into your next home or finding a rental wherever you move if you really want to get into the landlording business.

Where I live home prices have been pretty steady and we have not seen crazy swings in the housing market, so it is difficult for me to count on significant appreciation of my rentals.

rollie

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Re: Sell my condo or rent it? Help a newbie
« Reply #3 on: September 22, 2013, 02:50:28 PM »
I agree that cash flow is the best. But not always possible, and maybe not the best option. Just for another perspective, I have held multiple rentals for a decade. One of them for years did not cash flow--I paid early on up to $500 out of pocket each month. Now it does cash flow (maybe $100). However, the main point is that mortgage has been consistently paid by renters for the past decade. And it has gained about $100,000 in value at the same time. By the time we have paid off our current mortgage (another 8 years), we will be able to quickly finish the rest of that condo mortgage off, and will immediately have a monthly income of $2300 or more from the rent off of that condo alone. Forever.

What you need to think about is, if you sell, do you plan to buy another investment property or just pour the money into your next residence? If you sell in favor of just a residence, you will be lacking in a very good solid investment. How do you plan for retirement income? If you won't live too far, and have the ability to manage it yourself (which I do), you will find that a rental that pulls in $2400 per month can be a great source of income for your future. While you pay off your primary residence, someone else is paying all of your interest, condo fees, and most of your principal on another property. I would keep it unless I had a far better investment property available in front of me. Don't forget, every sale and purchase has transaction costs. You've already paid those, so what you sounds like a solid investment.

SCIGEM

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Re: Sell my condo or rent it? Help a newbie
« Reply #4 on: September 22, 2013, 03:40:59 PM »
Thank you rollie and apennysaved for your comments!

I was hoping that if we keep this even if at a cost at some point it will become cash flow. I dont have the need for the money I have put in it. We can rent for the next few years. This property is in a prime location and even a short sale at this building sold for ~370K so I dont anticipate that there will be a big drop in value in case the economy goes south during the next 10 years or so. I personally like that someone else is paying for my mortgage but my significant other thinks selling is a better idea. We will probably be 2-3 hrs drive away from here.  If I do sell, I will probably invest it somewhere else by buying couple of 100-150K rental properties. Although I am not sure they will be in a location as our current condo. Our combined income will increase upto 40% next year due to these job changes. Plan is to live on one income and save the other. We have another 130K rental that we bought last year that has a 500$ cash flow and managed by a management company long distance. Have two kids and I am hoping that one of these properties in another 10-15 yrs will help pay education costs. 

SCIGEM

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Re: Sell my condo or rent it? Help a newbie
« Reply #5 on: September 28, 2013, 04:40:53 PM »
Hello All,

I looked at the Zestimate for my condo right now and it shows 526K so way above what I thought it was going to be. Even conservatively, if it means that it sells between 460-480K, would it be a good idea to sell now? Since we will be moving in another 6-8 months any ways. I would appreciate it if you can give me your opinions!

Thank you all!