Author Topic: Keep or sell condo rental property?  (Read 1560 times)

kbunning

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  • Location: Boulder, CO
Keep or sell condo rental property?
« on: January 24, 2015, 09:12:47 AM »
Newbie here ... just getting my financial life together so please be patient :)

A few years back I met the love of my life and decided to live with her, in her place.  Rather than sell my very small, old condo for a loss, I've been using it as a rental property ever since (about 7 yeas now).  Wondering if we should keep it or sell it ... it's almost back to a reasonable selling price now that the market has recovered some.

Here's the info:
Value of property:  conservatively $95,000 (similar unit sold last summer for the price but market might be even better now)
Location:  Boulder County - Colorado - a pretty good rental location (just outside Boulder in Gunbarrel for those of you familiar with Boulder)
Original purchase price:  $108,000 (2004 during real estate bubble)
Original mortgage:  97,200
Int rate:  ARM 2.875
Mort term:  30 yrs
Term remaining:  19 yrs
Amt remaining:  63,658
Gross rent:  $850 (includes utilities which are less than $100 per month)
P&I:  $430/mo
T&I:  $60/mo
HOA:  $220 - includes utilities
Deferred maintenance - here's my biggest concern.  I'm CERTAIN there will be huge maintenance costs in the future.  I think the HOA board has mismanaged money and needed repairs, but I've mostly been ignoring this ... up to now.  We lived out of state for a while, had great tenants, it just didn't take much effort to keep it rented, so I just went with the flow on it.

I could probably raise the rent, but I get a lot of personal satisfaction out of helping someone live here at a more reasonable price.  Rents are outrageous around here.  And all of my tenants have been great!

We are very financially stable - large emergency funds, no consumer debt, no student loan debt, etc.  Retirement accounts are on track.
We own another property (outright) in the mountains nearby.  And we live in another condo within five minutes of the rental unit here in Boulder.  We owe less than 100,000 on the one we live in.  We plan to use both condos as rental properties once we retire to the mountain house ... in 5-10 years (both could be paid off by then now that I have our finances more on track).

I could also use advice on how to learn more about HOAs, being a landlord of a condo, etc (suggested readings?)


SpicyMcHaggus

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Re: Keep or sell condo rental property?
« Reply #1 on: January 27, 2015, 09:03:31 AM »
it's an HOA. The fee will never go down; only up.
Get out while you still can and you're making a small profit instead of waiting for it to cost you money even if it is rented.
CO prop taxes are cheap. Buy a duplex/rental SFH with the proceeds.

Another Reader

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Re: Keep or sell condo rental property?
« Reply #2 on: January 27, 2015, 09:40:50 AM »
Are you sure about the value of the property?  If it were worth $115-$130k would that change your decision?  I don't see any listings in Gunbarrel at all.  In Longmont, which includes Gunbarrel per Realtor.com, there is nothing under $132,500.  I don't know the area, but I would get some estimates of value from several local agents before I even asked the question.

As to whether you should sell, the rate of return is not great.  Paying it off while rates are low is a good option, but as you point out, there is deferred maintenance.  You will likely be hit with special assessments and the HOA fees will increase.  However, I don't think you will find anything locally that will offer great cash flow.  In your shoes, I would consider selling in the improved market, as long as I could find an investment for the net proceeds that would earn a better rate of return.   

waltworks

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Re: Keep or sell condo rental property?
« Reply #3 on: January 28, 2015, 08:51:17 AM »
I bet it's worth more than you think. Boulder county has gone nuts (too bad we sold ours a year ago... sigh)

Probably a bad rental to keep no matter what, though, if you really expect lots of deferred maintenance.

-W

kbunning

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Re: Keep or sell condo rental property?
« Reply #4 on: January 28, 2015, 07:14:46 PM »
Thanks everyone for your advice!! 

Every time I have to find a new tenant, I think, "I should just sell it ..."  My tenant is willing to stay for another year, so we'll probably hang on to it until next spring.  Hopefully the selling price will improve by then (or be at least as decent as it would be this year).

Yes, the market in Boulder County has gone nuts!  However, this is an older condo complex and I don't think I could get more than $100,000 for it.  But we'll see.