Author Topic: Use savings to pay off mortgage?  (Read 3691 times)

orcateeth

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Use savings to pay off mortgage?
« on: September 26, 2014, 09:10:19 PM »
Here's my situation: I bought this condo in 2002. It's in a very small condo building, only four units. I'm the condo president and the only one on the condo board. This means that I do all of the work of running the building, getting estimates, arranging repairs, leaning on the others to get them to pay the assessment, filing suit on them (had to do this on two of the three other owners in 2010), and everything else. My commute is an hour from work also, which doesn't help things.

Market value: Not totally sure, but a unit just sold for $75K down the street. Another sold for $65K. Still some foreclosures here.
Original price: $137K
Original Mortgage: $129K
Interest Rate: 3.675%
Term: 20 years
Years remaining: 19
Amount remaining: $105K
Gross rent: $1400
Principle  & Insurance: $608
Taxes and Insurance: $200
HOA: $250
Deferred Maintenance: unsure
Extra issues: We have very low condo savings, and about $20K worth of repair work needed, so we will have to have a special assessment.

I would like to sell and move closer to work, but not only am I underwater, I am the only one managing the building. I've checked into management companies (for the association, not my unit) and most won't accept a 4-unit building. The ones that do have negative reviews on Yelp for ripping off their clients.

Right now, one unit is rented to someone who lives in California, another is vacant (in foreclosure) and the third has a non-English speaking owner. I'm hoping to resign as president after someone buys the vacant unit.

I have enough to probably bring enough cash to the closing if it sold for $75K, but then I would lower my savings by at least 60%.
« Last Edit: September 26, 2014, 09:14:39 PM by orcateeth »

jmoney

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Re: Use savings to pay off mortgage?
« Reply #1 on: September 27, 2014, 08:49:28 PM »
Well from your numbers if you can get 1400 rent then why not rent it? Using your numbers and adding in maintenance you would probably break even. Maybe the market will go up so you can sell? If not else the tenant will pay down your principal over time.

If you really wanted to clean your hands a short sale may be in order. I would not pay $30 k to keep my credit score. Maybe your situation is different.

orcateeth

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Re: Use savings to pay off mortgage?
« Reply #2 on: September 30, 2014, 09:31:24 PM »
I don't think a short sale would be approved by the bank, as I don't have what they would call a hardship. I am not unemployed, nor do I have to move for work. I would just like to be done with the whole situation, which I won't be if I rent it out. Then I get to deal with the tenants as well as the owners.

Dicey

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Re: Use savings to pay off mortgage?
« Reply #3 on: September 30, 2014, 10:24:33 PM »
"I would just like to be done with the whole situation" sounds just a tad complainypants to my ear. You knew what you were getting into when you bought the property (or should have had an inkling). Personally, I'd advise you to take a stoic approach. Tough this out until the market gets better, as it eventually and inevitably will. How much would you have to gross to make up the difference if you sell it short? Not worth it. And HELL NO, do not pay it off. Are you out of your mind?

escolegrove

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Re: Use savings to pay off mortgage?
« Reply #4 on: October 04, 2014, 01:23:29 AM »
Now take the below with a grain of salt because I am a buy and hold investor.

If you were allowed to with the condo documents I would buy the foreclosed unit and rent the units out. This way all the work is worth it. I would than rent the units out so at least you are being "paid for" your time by making money.

Handlebar Harry

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Re: Use savings to pay off mortgage?
« Reply #5 on: October 07, 2014, 06:47:51 AM »
Do what escolegrove suggests if the numbers work in your favor.

Dicey

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Re: Use savings to pay off mortgage?
« Reply #6 on: October 08, 2014, 04:25:47 PM »
I agree with Harry. Taking escolegrove's advice would truly be making lemonade out of your situation. Brilliant!

orcateeth

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Re: Use savings to pay off mortgage?
« Reply #7 on: November 12, 2014, 09:28:28 PM »
Update:  The foreclosed unit sold to a woman who seems to not want to be involved with the condo association. Her husband, who said he was the owner (he's not, as only her name appears on the deed) seems to want to run everything and even take over the condo association. He owns property, but doesn't know legal guidelines pertaining to condo associations. For instance, when I told him that we have to give ten days' notice to owners to have a board meeting, he didn't see why that was necessary, since most don't participate anyway.

Anyway, I seem to be wrong about the amount of rent I could charge for my unit. Another unit, identical to mine, located down the street, is being advertised for $1200. However, its kitchen as well as bathroom have been totally upgraded. It has new cherry cabinets, granite counter tops, stainless steel appliances and a whirlpool tub. I don't have these upgrades, so I doubt that I could get $1200. If I have to rent for less, it will be tight to cover the mortgage.

I've also looked at rents closer to my office  and they are more than what I am paying here, so I'm not sure if it's still a good idea to move. But I still want to.