[Sell Condo or Stay?]

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Topic Author
Detroittl
Posts: 98
Joined: Wed Jun 10, 2015 12:12 am

[Sell Condo or Stay?]

Post by Detroittl »

Bought a condo almost 4 years ago. It’s gone up 4 percent per year last 4 years. I could rent a smaller nicer place for about what my mortgage is in a better location (to me). Take the equity and invest/save it for MAYBE another purchase condo or SFH In the future (2 to 10 years no idea).

60K in equity after commission if I sold today

Pros of staying put:
If it’s going up in value I’m building a lot of equity.
Will still enjoy a small tax benefit from owning (for now)
Nice spacious place (I’m not home too often though)
Nice outdoor space
Locked in low interest rate

Cons:
Looking dated fast and want to remodel some rooms
Near loud transportation
Feel stuck if there is a downturn, not locking in almost 20 percent gain
New apartment will be smaller (but nicer and brand new in a different area - need a change of pace)
All other unknowns and risks

After accounting for all utilities and extra costs and tax advantages and repairs and maintaince I would pay :

2500 a month to stay where I am if the value of the property stays flat
2900 a month if it goes down 1 percent each year
2100 a month If it goes up 1 percent each year
Last edited by Flyer24 on Mon Jan 06, 2020 11:07 pm, edited 1 time in total.
Reason: Title clarity
Cycle
Posts: 1825
Joined: Sun May 28, 2017 7:57 pm
Location: Minneapolis

Re: Sell or Stay?

Post by Cycle »

Have you factored in sitting asset cost? ie if 60k in equity, assume a return of 4% (or whatever), so $200/mo if assuming 4% real return on that money if it were in your taxable account.
Never look back unless you are planning to go that way
mikepeetz84
Posts: 27
Joined: Sun Feb 26, 2017 1:43 pm

Re: Sell or Stay?

Post by mikepeetz84 »

If you were to rent it out how much would you cash flow after paying Mortgage? Property insurance/taxes? Do you have adequate savings to cover existing mortgage and a new mortgage. I just ask because it would be ideal to hold your existing property rent it out and buy another one all while the first is paying for itself and increasing in value and you are in a better area. I don't know how it works where you are but I would assume it is the same(California), you can not use rental income towards your debt to income for qualifying if you have been a landlord for less than two years. I am sure there are ways around this.

Switching gears now, I completely understand where you are coming from when it comes to not wanting to missout on the equity that is built in a property I have a rental right now that is 300k+ equity right now I bought in bottom of 2009 in California. I always think what if the market tanks again there is no such thing as equity if it is not in my bank account but I am lucky to be cash flowing good all while hopefully still being able to sell in the end if ever, for a good profit . I did exactly like you are thinking I fixed up my old place(the rental) and bought a new place in a better neighborhood....Its all possible it just might take a little time. If you don't think luck is on your side with the market or there is no way you could buy another place and keep your existing....I would sit down crunch numbers post on this board over and over like I do and settle on a decision that will put you in a dominant position.
Topic Author
Detroittl
Posts: 98
Joined: Wed Jun 10, 2015 12:12 am

Re: Sell or Stay?

Post by Detroittl »

Cycle -

Yes I factored that in with a real gain of about 2 percent.
Topic Author
Detroittl
Posts: 98
Joined: Wed Jun 10, 2015 12:12 am

Re: Sell or Stay?

Post by Detroittl »

Mike -

Cash flow would break even if I rent it out. Lots of risk and I have no interest being a landlord

DTL
Sam1
Posts: 506
Joined: Mon Apr 09, 2018 7:24 am

Re: Sell or Stay?

Post by Sam1 »

I would stay primarily because it doesn’t sound like your rent will be significantly less than what you’re currently paying. Moving is expensive and there are unexpected costs. Also you know what your mortgage will be the next five years but rent increases are uncertain.

You’d feel like a moron if you invested the 60k and the market crashed. Then you’d be renting with a depressing brokerage account.
Topic Author
Detroittl
Posts: 98
Joined: Wed Jun 10, 2015 12:12 am

Re: Sell or Stay?

Post by Detroittl »

Sam - good insights. The rent is variable but the property taxes have gone from 5000 to 7000 so far and the big bump is supposed to come this fall. Probably another 2000 a year.
Topic Author
Detroittl
Posts: 98
Joined: Wed Jun 10, 2015 12:12 am

Re: Sell or Stay?

Post by Detroittl »

Worked out so far. Value is 40k less than I sold for a year ago (identical unit in same building sold for that in summer).

Thanks again for advice.
RevFran
Posts: 218
Joined: Sun Jul 07, 2019 4:48 pm

Re: Sell or Stay?

Post by RevFran »

To sam’s comment about unpredictable rent: repairs and how assessments can also be unpredictable.
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