FU Rather than FIRE - Thoughts on Keeping or Selling Condo?

[desert_phoenix]

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

[mistymoney]

need quite a bit more details....numbers....age, condo value, income, stache....

[ROF Expat]

If you decide you want to go overseas, don't put the cart before the horse and rush to sell the condo.  Make detailed plans for your next steps and then when you start executing your plan to go overseas, make selling your condo the final part of your plan (just in case you change your mind at the last minute).   

Personally, If you are planning to go overseas for a short period (less than a year or two) and you think you might return to the DC area, you might want to consider keeping the property.  If you are confident that you are going to be gone for a longer period,  I would advise you to sell the condo.  It sounds like the 15 - 18k loss won't be a huge deal for you, you don't believe that the value of the condo is going to appreciate much, and renting it out will result in negative cashflow.  Is there a compelling reason to keep it? 

I have lived between the DC area (DC, MD, and VA) and international jobs for over 30 years and I can tell you that being a long-distance landlord from overseas can be pretty painful.  I do it at the moment, but only because I love my house and know I will not be able to replace it with a similar property if/when I move back to the DC area

[desert_phoenix]

need quite a bit more details....numbers....age, condo value, income, stache....

The condo would sell for in the $210,000 - $215,000 range currently
My current oustanding balance is: $213,542.70

My monthly payment is $1,256.92 broken down as:
Principal and Interest   $993.45
Hazard Insurance   $27.76
County Tax   $192.27
Shortage   $43.44

The monthly condo fee is $578

Thus, $1834.92 monthly cost right now.  I'd be able to rent it out at ~$1525 worst case.

I have no debt outside of the mortgage.

-----------
Right around $244,000 invested
Investments/Retirement:
Vanguard Total of $128,889.17 broken down as

$78,808.65 brokerage (63.5k in VTSAX & 15.3k in VTIAX)
$50,080.52 roth (40.5K VTSAX & 9.5K in VTIAX)

Thrift Savings Plan total of $115,119.91 in a 65/15/20 split between C/S/I (common stock/small cap stock/international stock)

I will turn 34 in about 7 months. 

If I never worked again past January first, my pension at 62 would be around $10,000 on the dot (in today's dollars, not adjusted for inflation) and my social security entitlement now, if I did not work anymore, was around $8400 a year or so.

-----------

Another option just occured to me as well.  I could just take some out of my brokerage or Roth to put against the mortgage.  If I had 20% down equivalent and the 993 number went down an equivalent amount and was only $794.4, it would be around $1636.32 a month I'd owe in total, and closer to a number I could reasonable rent ($1525-$1650 is where rent I could get would likely fall). Though not sure if cashing in 40k of my Roth or brokerage would be worth that.

[desert_phoenix]

If you decide you want to go overseas, don't put the cart before the horse and rush to sell the condo.  Make detailed plans for your next steps and then when you start executing your plan to go overseas, make selling your condo the final part of your plan (just in case you change your mind at the last minute).   

Personally, If you are planning to go overseas for a short period (less than a year or two) and you think you might return to the DC area, you might want to consider keeping the property.  If you are confident that you are going to be gone for a longer period,  I would advise you to sell the condo.  It sounds like the 15 - 18k loss won't be a huge deal for you, you don't believe that the value of the condo is going to appreciate much, and renting it out will result in negative cashflow.  Is there a compelling reason to keep it? 

I have lived between the DC area (DC, MD, and VA) and international jobs for over 30 years and I can tell you that being a long-distance landlord from overseas can be pretty painful.  I do it at the moment, but only because I love my house and know I will not be able to replace it with a similar property if/when I move back to the DC area

I would consider keeping it for a few reasons:
1)  It could utterly bust for me to go do....whatever it is out there I will go do.  At least I'd have a place to come back to.  Say there is a huge recession and everything fails and I am jobless.  I am unlikely to be able to get a new mortgage then, even with the GI Bill.  I could at least give notice to tenants and move back in here.  Even if my stache was cut in half, I'd be able to get by a few years.
2)  Similarly to what you said about your place, I like my place quite a bit.  It is a bit of an older community (hence the high condo fee), but I don't think I'd ever be able to get back in at this low of a price in an area with so much going for it and more nice community amenities coming online over the next few years.
3)  Say I lost $350 out of pocket a month for 3 years (length of time randomly chosen).  That is a tad less than the equity I'd build in the property due to the interest/principle division when I look at the amortization.  So selling in that time, if it was clear I was not returning, would likely mean coming closer to breaking even on the property when considering realtor fees even with zero appreciation.

Now, it is possible that there is an ugly recession and housing crash and my place loses value and I am underwater on the loan.  But for condos in this range of price, there simply seems to just be less room for them to fall compared to something that runs $600k plus, for example.

[mistymoney]

Another option just occured to me as well.  I could just take some out of my brokerage or Roth to put against the mortgage.  If I had 20% down equivalent and the 993 number went down an equivalent amount and was only $794.4, it would be around $1636.32 a month I'd owe in total, and closer to a number I could reasonable rent ($1525-$1650 is where rent I could get would likely fall). Though not sure if cashing in 40k of my Roth or brokerage would be worth that.

I wouldn't withdraw anything. If you want to keep the condo and feel it is worth the additional money, plan on paying the shortfall as a monthly bill in your plans forward. It would be the same as if you took out the investments, then starting putting a few hundred a month back.

Better to just leave the money there compounding. You don't have so generous a stache that you should be taking anything out especially when you want to get to FI asap.

[mistymoney]

another note on renting out, as you say the area is becoming increasingly desirable, you may be able to charge more rent down the line.

[desert_phoenix]

Another option just occured to me as well.  I could just take some out of my brokerage or Roth to put against the mortgage.  If I had 20% down equivalent and the 993 number went down an equivalent amount and was only $794.4, it would be around $1636.32 a month I'd owe in total, and closer to a number I could reasonable rent ($1525-$1650 is where rent I could get would likely fall). Though not sure if cashing in 40k of my Roth or brokerage would be worth that.

I wouldn't withdraw anything. If you want to keep the condo and feel it is worth the additional money, plan on paying the shortfall as a monthly bill in your plans forward. It would be the same as if you took out the investments, then starting putting a few hundred a month back.

Better to just leave the money there compounding. You don't have so generous a stache that you should be taking anything out especially when you want to get to FI asap.

I agree. I only listed because it can be helpful to consider all options!  But yes, I think either renting and covering the shortfall or selling it makes more sense.  Though my rush to FI was only had I planned to stay in my current job, haha.  I am not in a rush if I find something more enjoyable :)

[LightStache]

Ha! This was my exact situation in 2015. Wanted to take a break from the government, so I left DC for Asia and rented out my properties there. Both were 100% LTV VA loans and negative cash flow.

I'd keep your property without refinancing and just support the negative cash flow. That's what I did and it wasn't bad since it was all part of a plan. You have plenty of reserves to handle situations that pop up.

I'm curious to know what you end up doing professionally -- good luck!