Condo: Keep or toss?

[YouAreTheFocus]

We bought a condo back in 2004, practically at the top of the market. After DS was born (2009) we figured we would stay there until it felt outgrown. About 1.5 yrs ago we had enough, and started looking to buy or rent a house. The market here (sf bay area) was really tight & crazy, we finally moved into a house (rental) this past fall.

At first we thought we'd rent our condo, b/c there were lots of short sales in our bldg and we didn't think we'd be able to sell it for enough to cover our mortgage balance. However we never got around to renting it :bag and have been paying for both places for several mos (ouch). If we were to rent it we wouldn't make much, maybe $100/mo (after paying the mortgage/prop tax/HOA/mgmt fee).

Now an almost identical condo in our bldg is pending for an asking price of exactly what we paid back in 2004. If this goes through anywhere near the asking, I'll be very tempted to sell and just be free of it.

Neither of us is knowledgeable about RE at all. Is there any reason to hang onto it and rent, when we'd be making very little?

So, would you keep or toss? :wink2:

[westwoodmom04]

We bought a condo back in 2004, practically at the top of the market. After DS was born (2009) we figured we would stay there until it felt outgrown. About 1.5 yrs ago we had enough, and started looking to buy or rent a house. The market here (sf bay area) was really tight & crazy, we finally moved into a house (rental) this past fall.

At first we thought we'd rent our condo, b/c there were lots of short sales in our bldg and we didn't think we'd be able to sell it for enough to cover our mortgage balance. However we never got around to renting it :bag and have been paying for both places for several mos (ouch). If we were to rent it we wouldn't make much, maybe $100/mo (after paying the mortgage/prop tax/HOA/mgmt fee).

Now an almost identical condo in our bldg is pending for an asking price of exactly what we paid back in 2004. If this goes through anywhere near the asking, I'll be very tempted to sell and just be free of it.

Neither of us is knowledgeable about RE at all. Is there any reason to hang onto it and rent, when we'd be making very little?

So, would you keep or toss? :wink2:

If you can sell without a loss or even without much of a loss, I'd sell. It's a fair amount of work to be a landlord, and it doesn't sound like you have much interest in doing so.

[Kindra178]

If you can sell without a loss or even without much of a loss, I'd sell. It's a fair amount of work to be a landlord, and it doesn't sound like you have much interest in doing so.

Agree with this.

[BayGirl2]

Its pretty hard to play the market and just as hard to make money off of renting if you have a mortgage. I'd try to sell for close to what you paid and be glad if you walk away with only a bit of a loss in this market.

The exception would be if you owned it outright or there was some kind of tax benefit, but I'm not hearing any of that. Do you have plans to buy somewhere else soon? If so you'd want to lower your overall debt to qualify for a bigger mortgage.

[KLD313]

I'd sell. Also, you'd be paying capital gains taxes if you're making any profit. I say this because of I could get what I paid out of my rental property I would dump it in a hot minute.

[hillview]

If you can sell without a loss or even without much of a loss, I'd sell. It's a fair amount of work to be a landlord, and it doesn't sound like you have much interest in doing so.
:yeahthat:

[wellyes]

Toss no doubt.

[YouAreTheFocus]

If you can sell without a loss or even without much of a loss, I'd sell. It's a fair amount of work to be a landlord, and it doesn't sound like you have much interest in doing so.

LOL, touche! Obviously we would be terrible landlords, if we can't even get our act together to get it prepped & rented over many months! That's why I figured in the 10% mgmt fee, to cover full mgmt services. But yeah, I definitely lean towards washing my hands of it.

Question to all--when you say "sell without a loss/without much of a loss" do you mean off the purchase price, or off the mortgage balance?

[crl]

I'd probably sell. One advantage in CA to keeping is that the taxes don't go up (Prop 13). So that is an advantage to holding on to property. And if you hold on to it for a long time, I think you will make money on the sale. But the counter is that with rent control in the city it can be hard to have much opportunity to raise the rent and thus to make enough to keep up with repairs, etc.

I think dh would say keep it. I would probably be inclined to toss it.

Catherine

[rlu]

Not the same situation, but I think the reasoning is similar. We lived in TX for 18 months, owned a house there about 2 years. We sold it for $1k more than we paid, overall a loss due to closing fees, inspections, etc. When we listed, we decided if we could lose only what we would have paid in rent the time we lived there, we were golden. We had not bought as an investment, but a residence and we were satisfied how it worked out.

If you can sell and only lose what you would have been out renting anyway, you're ahead. If you lose that and more but you can absorb/stomach, I think that is the way to go.

OTH, my aunt has lived in her condo for 20+ years, but she fully intended to.

I guess the question is, why keep it if you don't plan to ever live in it again (or do you want to retire back to it someday)?

[rlu]

Question to all--when you say "sell without a loss/without much of a loss" do you mean off the purchase price, or off the mortgage balance?

Overall out of pocket is my perspective.

[BayGirl2]

Overall out of pocket is my perspective.

Mine too. Although given the bubble here when you bought I think selling above the mortgage owed is a reasonable yet painful goal for some people.

[YouAreTheFocus]

Its pretty hard to play the market and just as hard to make money off of renting if you have a mortgage. I'd try to sell for close to what you paid and be glad if you walk away with only a bit of a loss in this market.

The exception would be if you owned it outright or there was some kind of tax benefit, but I'm not hearing any of that. Do you have plans to buy somewhere else soon? If so you'd want to lower your overall debt to qualify for a bigger mortgage.

Yes, being able to buy something bigger down the road is a factor to some extent. It would be nice to buy a house in good district for when DS starts K (2015), but not a must. We're fine with renting a house, too. Inventory has been so low over the past year, at this point we're not assuming we'll be able to buy.

[BabyBearsMom]

If you continue to rent you won't have any mortgage interest to deduct on your taxes so think of that

[BayGirl2]

Yes, being able to buy something bigger down the road is a factor to some extent. It would be nice to buy a house in good district for when DS starts K (2015), but not a must. We're fine with renting a house, too. Inventory has been so low over the past year, at this point we're not assuming we'll be able to buy.

I will say that I think things are moving really quickly on the market lately, at least in my town. Low inventory will help you as a seller for sure. I have seen people trying to rent in our town but not finding anything.

Another neighbor family just did a house swap, which is kind of interesting. They "traded" their smaller 3 bdr with a widow in our development who no longer needed her larger 4 bdr. Its legally 2 sales, but neither ever hit the market.

Just some food for thought, I do feel like things are moving fast so if you plan to sell, now is not a bad time.

[westwoodmom04]

LOL, touche! Obviously we would be terrible landlords, if we can't even get our act together to get it prepped & rented over many months! That's why I figured in the 10% mgmt fee, to cover full mgmt services. But yeah, I definitely lean towards washing my hands of it.

Question to all--when you say "sell without a loss/without much of a loss" do you mean off the purchase price, or off the mortgage balance?

Sorry didn't mean to offend. If you bought at the peak and can sell for that price, that would be great. I was actually thinking pay off your mortgage, and realtor commission, transfer taxes, if any, etc. . If you can walk away with a bit of profit, all the better.

[mackmama]

I'd sell if you can get a reasonable offer. I think it'd be a weight off of your shoulders.

[larig]

Not the same situation, but I think the reasoning is similar. We lived in TX for 18 months, owned a house there about 2 years. We sold it for $1k more than we paid, overall a loss due to closing fees, inspections, etc. When we listed, we decided if we could lose only what we would have paid in rent the time we lived there, we were golden. We had not bought as an investment, but a residence and we were satisfied how it worked out.

If you can sell and only lose what you would have been out renting anyway, you're ahead. If you lose that and more but you can absorb/stomach, I think that is the way to go.



this is a great way to look at it.

[YouAreTheFocus]

Sorry didn't mean to offend. If you bought at the peak and can sell for that price, that would be great. I was actually thinking pay off your mortgage, and realtor commission, transfer taxes, if any, etc. . If you can walk away with a bit of profit, all the better.

No offense at all--your comment was spot-on! :) I'd pay the $200 mgmt fee w/o hesitation, b/c otherwise it would be a disaster!

Thanks for the clarification on "loss"--I wasn't sure if we should be ok with covering mortgage & associated sale fees, or holding out for full purchase price. There is a significant difference--covering our purchase price would require an add'l $50,000.


...If you can sell and only lose what you would have been out renting anyway, you're ahead. If you lose that and more but you can absorb/stomach, I think that is the way to go....

I agree about the monthly payments. But mulling this over makes me realize I am sad about the downpayment. We put 20% down and had help from various family members. That's a lot of money. This experience has left us rather jaded about home ownership. We liked living there but in retrospect it seems we would have been better off renting.

[YouAreTheFocus]

...I will say that I think things are moving really quickly on the market lately, at least in my town. Low inventory will help you as a seller for sure. I have seen people trying to rent in our town but not finding anything.
...

Good to know, that could be us in couple years--yours is 1 of 2 towns we want to move to for K :)

[BayGirl2]

Good to know, that could be us in couple years--yours is 1 of 2 towns we want to move to for K :)

Well PM me if you start looking over here. You would not be the first BBB'er to move here.

[crl]

Well PM me if you start looking over here. You would not be the first BBB'er to move here.

:rotflmao: pm me too. I think I pmed BayGirl2 five million times, must be my turn to answer at least some of the questions.

Catherine

[BayGirl2]

:rotflmao: pm me too. I think I pmed BayGirl2 five million times, must be my turn to answer at least some of the questions.

Catherine

Some day soon we can have an IRL BBB support group in our town.

[crl]

Some day soon we can have an IRL BBB support group in our town.

Totally. My youngest would be in heaven if I found kids for her to play with on a regular basis. Fingers crossed we get into preschool in the fall because she is such a social little thing.

Catherine

[BayGirl2]

Totally. My youngest would be in heaven if I found kids for her to play with on a regular basis. Fingers crossed we get into preschool in the fall because she is such a social little thing.

Catherine

You really should just bring her to our 'hood to play in the mini-park some weekend afternoon. We have more 1-4 year olds on this block than we know what to do with.

[YouAreTheFocus]

Well PM me if you start looking over here. You would not be the first BBB'er to move here.


:rotflmao: pm me too. I think I pmed BayGirl2 five million times, must be my turn to answer at least some of the questions.

Catherine

LOL, thanks you guys :) I'll take you up on that when the time comes! I always keep an eye on houses over there. Our must move by date is Jan '15 (basically in time to register for K).

BayGirl2--That's awesome that you have so many little ones in your neighborhood! DS would be beside himself to have neighbor kids to play with!

[citymama]

YATF: I know the world's most awesome realtor in our area if you want to talk someone. She is the opposite of what I expected in a realtor and saved is beaucoup bucks when we bought 2 years ago. LMK if you want her contact info.

[crl]

You really should just bring her to our 'hood to play in the mini-park some weekend afternoon. We have more 1-4 year olds on this block than we know what to do with.

Our block seems mostly older but when I make it to the park, about three blocks away, mid-day there's always a few toddlers there. I think I just need to make it at the same time and on the same day for a while and see if we can connect with some repeat visitors. And we have a new family moving in next door in a couple of months with a third grade boy and a four year old. ;). Score!


YATF: I know the world's most awesome realtor in our area if you want to talk someone. She is the opposite of what I expected in a realtor and saved is beaucoup bucks when we bought 2 years ago. LMK if you want her contact info.

We have a great realtor for our area too. And we had some AWFUL realtors before we found her so I finally understand how important it is to have good agent when buying, especially in the Bay area, where all the customs are so different from the East Coast.

Catherine

[citymama]

Good to know, that could be us in couple years--yours is 1 of 2 towns we want to move to for K :)

Wait, are we all local to each other? BBBplaygroup, anyone? Or maybe mama shopping day, led by goldenpig...

[crl]

Wait, are we all local to each other? BBBplaygroup, anyone? Or maybe mama shopping day, led by goldenpig...

Sounds like fun. :)

Catherine

[vonfirmath]

I agree about the monthly payments. But mulling this over makes me realize I am sad about the downpayment. We put 20% down and had help from various family members. That's a lot of money. This experience has left us rather jaded about home ownership. We liked living there but in retrospect it seems we would have been better off renting.

There are, indeed, times that one is better off renting.

[minnie-zb]

I know I'm in the minority, but I don't think I would sell if you don't have or need to. I would rent the property -- at least you aren't losing money by renting and you have the potential to make money in the long run.

I would suggest talking with an accountant who can give financial and tax advice which would enable to you to make an educated decision.

[goldenpig]

Wait, are we all local to each other? BBBplaygroup, anyone? Or maybe mama shopping day, led by goldenpig...

Did someone say shopping? ;)

But seriously, I'd love to join a playdate! I'm on maternity leave right now for the next couple of weeks, it would be fun to meet some of you IRL!

OP, I would get rid of that condo if at all possible. When we lived in SF, we rented our condo in SF for a year while we were away for DH's internship and it was a headache (tenants burned a hole in the carpet and damaged the closet shelves). Taking a loss isn't bad if you can meet the mortgage price and get out of the debt. DH would love to move but I think we wouldn't even be able to sell for what we owe on the mortgage because the market is so soft right now.

[wellyes]

I know I'm in the minority, but I don't think I would sell if you don't have or need to. I would rent the property -- at least you aren't losing money by renting and you have the potential to make money in the long run.

I would suggest talking with an accountant who can give financial and tax advice which would enable to you to make an educated decision.
She's only breaks even if she always has a reliable tenant. Every month she doesn't is a loss.

[arivecchi]

I would sell it and move on. Being a landlord can be a huge hassle (BTDT) - not to mention trying to sell a condo while it's being rented out. In addition, you have to worry about damages to the condo and being on the hook for special assessments. I'd unload asap.

We sold our last home at a loss and lost a pretty significant downpayment. Overall though, it was the right move for us and we have now bought another house - where we plan to stay for a long long time. I think the key is not buying real estate for the short term.