Sell or Keep a rental condo

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amd555
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Sell or Keep a rental condo

Post by amd555 » Fri Jan 12, 2018 4:14 pm

So I’ve been a landlord for about a year. I have a condo in Chicago taht I bought in 2010. Bought a house in 2016 and started renting it out same year. Rented at $1275/mo (thus $15300/yr). It being a condo, there is an HOA of $234.20 ($2810/yr) and taxes are maybe $1500/yr. The condo is paid off. So doing the math, the condo nets me appx $10,900. That doesn’t include occasional service issue or any major repairs, etc.
I am considering selling as the market is strong and I can get a premium as I have a deeded garage space. I paid $55k for the condo in 2010 and the market value right now is minimum $150k-$200k. The garage is very, very rare for the area. There is some street parking but the parking is not easy to find.
I am considering selling if I can get $180k. Assuming I can get 7% return on my cash after sale and not having to deal with surprises of being a landlord, repairs, upgrades etc. I would make minimum 10k a year in an investment account with that balance. I would also avoid being hit with cap gain taxes on the sale and no depreciation to payback.
Thoughts?

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Pajamas
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Re: Sell or Keep a rental condo

Post by Pajamas » Fri Jan 12, 2018 4:52 pm

amd555 wrote:
Fri Jan 12, 2018 4:14 pm
Assuming I can get 7% return on my cash after sale
That's a critical assumption that might or might not happen. Certainly you would have to accept risk in trying to achieve that.

soccerrules
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Re: Sell or Keep a rental condo

Post by soccerrules » Fri Jan 12, 2018 5:22 pm

I had thought at one time I wanted to own rental properties. At this time I have decided NOT to own rentals. For this reason I am "Out".

I would sell the condo and apply the proceeds to my AA. (vegas hand wash/clap)
Don't let your outflow exceed your income or your upkeep will be your downfall.

euroswiss
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Re: Sell or Keep a rental condo

Post by euroswiss » Fri Jan 12, 2018 5:35 pm

amd555 wrote:
Fri Jan 12, 2018 4:14 pm
I would also avoid being hit with cap gain taxes on the sale and no depreciation to payback.
Thoughts?
I'm a landlord myself so rental real estate doesn't intimidate me at all. How much leverage do you think you have as far as increasing rent? Your numbers would be close to a toss-up for me unless you have upside for rent increases. As someone already said, a 7% return is far from guaranteed in the market. That said, the "capex waiver" would clinch it for me toward selling - too good to pass up and it WILL expire if you don't sell in the next couple of years.

DrGoogle2017
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Re: Sell or Keep a rental condo

Post by DrGoogle2017 » Fri Jan 12, 2018 5:38 pm

I would sell it, I don’t like condos in general.

amd555
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Re: Sell or Keep a rental condo

Post by amd555 » Fri Jan 12, 2018 10:22 pm

Pajamas wrote:
Fri Jan 12, 2018 4:52 pm
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
Assuming I can get 7% return on my cash after sale
That's a critical assumption that might or might not happen. Certainly you would have to accept risk in trying to achieve that.
Understood. There is risk in being a landlord too...broken appliances, tubs, etc that can eat into your profit. If I put the cash into a Schwab intelligent account or an S&P index fund, I would make that or more. Always, no but long term, 7% to 10% is not unrealistic.

amd555
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Re: Sell or Keep a rental condo

Post by amd555 » Fri Jan 12, 2018 10:27 pm

euroswiss wrote:
Fri Jan 12, 2018 5:35 pm
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
I would also avoid being hit with cap gain taxes on the sale and no depreciation to payback.
Thoughts?
I'm a landlord myself so rental real estate doesn't intimidate me at all. How much leverage do you think you have as far as increasing rent? Your numbers would be close to a toss-up for me unless you have upside for rent increases. As someone already said, a 7% return is far from guaranteed in the market. That said, the "capex waiver" would clinch it for me toward selling - too good to pass up and it WILL expire if you don't sell in the next couple of years.
It is a decent Chicago neighborhood but on the edge of the city. I'm probably not going be able to increase it much. I'm already higher then most as I include the garage spot in that price. Only downside is I'm trying to get a premium price as I don't have to sell now. I would not however try to sell it as is with a tenant being there. So I'd have to ask them to move out, fix it up a bit and then get great shots and list.

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Sandtrap
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Re: Sell or Keep a rental condo

Post by Sandtrap » Fri Jan 12, 2018 10:41 pm

IMHO: sell.

j :D

raisinsaregrapes
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Re: Sell or Keep a rental condo

Post by raisinsaregrapes » Fri Jan 12, 2018 10:45 pm

Sounds like you don't want to deal with it any more, if that is the case I would sell it. You may be giving up profits though, or maybe not. Never know.

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Watty
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Re: Sell or Keep a rental condo

Post by Watty » Fri Jan 12, 2018 10:50 pm

amd555 wrote:
Fri Jan 12, 2018 4:14 pm
So I’ve been a landlord for about a year. I have a condo in Chicago taht I bought in 2010. Bought a house in 2016 and started renting it out same year. Rented at $1275/mo (thus $15300/yr). It being a condo, there is an HOA of $234.20 ($2810/yr) and taxes are maybe $1500/yr. The condo is paid off. So doing the math, the condo nets me appx $10,900. That doesn’t include occasional service issue or any major repairs, etc.
I am considering selling as the market is strong and I can get a premium as I have a deeded garage space. I paid $55k for the condo in 2010 and the market value right now is minimum $150k-$200k.
I would suspect that you would would qualify for the homeowners capital gains exemption but you would need to check on that. If so then you would not need to pay capital gains tax on the $100K+ gains.

If you rent it for a few years you will lose that and would lose that and could end up having to pay a LOT of capital gains taxes if you change your mind and decide to sell it in a few years.

I don't have any rental property and one of the reasons is that is that I don't want to have to deal with with being a landlord when I am 85 and might not be as capable. Even if you have a property management company taking care of it you will still need to monitor them and occasionally have to change property management companies.

Mimmz
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Re: Sell or Keep a rental condo

Post by Mimmz » Sat Jan 13, 2018 12:05 am

amd555 wrote:
Fri Jan 12, 2018 4:14 pm
So I’ve been a landlord for about a year. I have a condo in Chicago taht I bought in 2010.
I've been a landlord now for three years, of a bank-owned condo I bought in Chicago in 2010, so I feel like I can relate.
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
I am considering selling as the market is strong and I can get a premium as I have a deeded garage space. I paid $55k for the condo in 2010 and the market value right now is minimum $150k-$200k. The garage is very, very rare for the area. There is some street parking but the parking is not easy to find.
I bought my condo in the latter price range you mentioned in 2010, when it came with a deeded heated garage spot, and then I bought a second spot in the same building a few years later. Most condo buyers I know in Chicago expect a garage spot - it was zero degrees here the other day...
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
...and no depreciation to payback.
I don't think that's accurate. My understanding is that you will still owe depreciation recapture if your condo was used to generate rental income, and that you will be assessed the recapture whether you claimed the depreciation or not. Bigger Pockets would probably yield a more confident result.
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
Thoughts?
Psh, I'm hanging on for the ride - when HQ2 comes and solves that whole pesky fiscal crisis, and Musk builds the high speed tunnel to O'Hare, we'll make it up to coastal city prices!

WanderingDoc
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Re: Sell or Keep a rental condo

Post by WanderingDoc » Sat Jan 13, 2018 12:27 am

Pajamas wrote:
Fri Jan 12, 2018 4:52 pm
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
Assuming I can get 7% return on my cash after sale
That's a critical assumption that might or might not happen. Certainly you would have to accept risk in trying to achieve that.
Exactly. He/she might get a -7% return in the market. While, you will continually see positive rental income and appreciation over time im Chicago (barring nuclear devastation or other untoward event).

Personally, I would pull out $100K via a refi, now you have your entire $50K original investment out, plus an additional $50K tax-free cash money. Continue renting the condo and enjoy appreciation and tax benefits, and invest the other $50K in the market or bond. Win-win.
Rent where you live, buy where others pay your mortgage for you. | I'm not looking to get rich quick, I'm not looking to get rich slow, I'm looking to get rich.. for sure.

michaelsieg
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Re: Sell or Keep a rental condo

Post by michaelsieg » Sat Jan 13, 2018 12:32 am

On a 55k investment in 2010, you have been netting about 10.5k income /year for the past 7 years. I would look at this as an investment that creates cashflow, which has no correlation or very little correlation with equity markets. To be honest with you, I can't think of a better investment generating that kind of cash flow right now. To generate this kind of a secure cashflow (even if you reduce the math of your rental income to an average of 10 months per year due to renter changes) you would have to invest about 400k in the total bond market index (current SEC yield 2.61%) - so I would vote to keep it. Also, I would not raise the rent if you have a good renter and enjoy the cashflow your investment generates.

quantAndHold
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Re: Sell or Keep a rental condo

Post by quantAndHold » Sat Jan 13, 2018 2:24 am

Can you sell the condo and keep the parking space? How much rent could you get for the parking space alone? I can see why you wouldn’t want to manage a condo, but there are no appliances to break in a parking space.

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unclescrooge
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Re: Sell or Keep a rental condo

Post by unclescrooge » Sat Jan 13, 2018 2:46 am

Illinois is broke. I would not be a property owner in that state.

Beachdrinks
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Re: Sell or Keep a rental condo

Post by Beachdrinks » Sat Jan 13, 2018 5:13 am

In a somewhat similar boat with a rental property in NJ so I loved the question.

You need to have lived in the property for 2 of the last 5 years or you will pay cap gains tax. Or be doing a 1031 exchange into a new rental property. Someone correct me if I’m wrong? I finally got a great CPA which you should too to consult on this one before you get a massive tax bill.

One thing I love about real estate is the portfolio diversity it affords you. Also it makes it much harder to overspend on something big in your life. Liquid assets (speaking to after tax mostly) are a few clicks away from being cash and you can spend it on something you may not need. A property like that with a paid off mortgage still takes more work to sell and has great numbers financially given the low cost to you. If sh-t really hits the fan (lost job, zombie attack, divorce, etc) you could have a near rent free place to live.

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Tamarind
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Re: Sell or Keep a rental condo

Post by Tamarind » Sat Jan 13, 2018 7:51 am

I'd say sell. You don't love it, it's not a huge contributor to your cash flow, and you have an opportunity to take a tidy profit from the appreciation.

Carefreeap
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Re: Sell or Keep a rental condo

Post by Carefreeap » Sat Jan 13, 2018 10:55 am

Tamarind wrote:
Sat Jan 13, 2018 7:51 am
I'd say sell. You don't love it, it's not a huge contributor to your cash flow, and you have an opportunity to take a tidy profit from the appreciation.
+1

I've done well by my real estate but it's a job and not for everyone. Even my "good" tenants have caused issues over the years. At this point (turning 57 and 60 this year) I'm all for simplifying our lives so that we can travel when we're healthy vs trying to optimize our real estate investments.

As someone else posted, check with your CPA. While you won't own cap gains taxes I do think you'll need to recapture the depreciation.

Saving$
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Re: Sell or Keep a rental condo

Post by Saving$ » Sat Jan 13, 2018 11:09 am

So you paid $55k; lets say you net $170k ($185k sales price less commissions & closing costs). Let's say you can write off $5k in improvements for a gain of $110k. If you sold today, presumably you would save $16.5k in cap gains tax.

If you wait to sell when you no longer qualify for the cap gains exclusion, the condo has to increase in value to cover that tax savings - so you would need to have a pretax net gain of about $130k to net the same after taxes. How long until you can sell it for $205k?

Real estate can be a great investment, but it is a second job. Do not mistake it for a passive investment. I would sell. The small incremental income would not be worth the potential risk (bad tenant, etc) and aggravation. I say this as a landlord.

inbox788
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Re: Sell or Keep a rental condo

Post by inbox788 » Sat Jan 13, 2018 1:30 pm

Sounds like it's time to sell.
euroswiss wrote:
Fri Jan 12, 2018 5:35 pm
I'm a landlord myself so rental real estate doesn't intimidate me at all. How much leverage do you think you have as far as increasing rent? Your numbers would be close to a toss-up for me unless you have upside for rent increases. As someone already said, a 7% return is far from guaranteed in the market. That said, the "capex waiver" would clinch it for me toward selling - too good to pass up and it WILL expire if you don't sell in the next couple of years.
If OP wanted to be a landlord, is it worth paying the transaction costs for selling and buying a similar condo to lock in the cap waiver benefit and to reset the cost basis?
michaelsieg wrote:
Sat Jan 13, 2018 12:32 am
On a 55k investment in 2010, you have been netting about 10.5k income /year for the past 7 years. I would look at this as an investment that creates cashflow, which has no correlation or very little correlation with equity markets. To be honest with you, I can't think of a better investment generating that kind of cash flow right now. To generate this kind of a secure cashflow (even if you reduce the math of your rental income to an average of 10 months per year due to renter changes) you would have to invest about 400k in the total bond market index (current SEC yield 2.61%) - so I would vote to keep it. Also, I would not raise the rent if you have a good renter and enjoy the cashflow your investment generates.
IMO, it's a mistake to anchor on the $55k initial investment. The property is now worth $180k (if OP is correct). OP has a good result from the appreciation, but that's history. Going forward, the number to look at is 10.5k income on $180k investment, which may still be a good investment, but less obvious. I like the idea of taking out 100k and leveraging up on the property if the goal is to keep the property.

Shallowpockets
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Re: Sell or Keep a rental condo

Post by Shallowpockets » Sat Jan 13, 2018 3:24 pm

Say you sell for 180k. Let's say that your share is 100k, after taxes, etc. That is a ballpark figure probably on the low side. OK.
The S and P is up 4.21% already this year. 100k would have already earned you close to 1/3 of your yearly profit on this condo. Last year it would have earned you about 22k, double your yearly income on the condo.

So while your 55k condo earned you approx 20% return these last year's, now it has increased in value, but the real return has gone down. Now your 180k only earns you 5.5%.

Simplistic. Maybe. But illustrative.

At some point in life you are going to sell this condo. Why not when the economy is good.

cheesepep
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Re: Sell or Keep a rental condo

Post by cheesepep » Sat Jan 13, 2018 6:14 pm

Sell. I have been in the business and it is most certainly not worth the hassle even if your are profitable. Constant worrying about anything.

cherijoh
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Re: Sell or Keep a rental condo

Post by cherijoh » Sun Jan 14, 2018 9:17 am

Beachdrinks wrote:
Sat Jan 13, 2018 5:13 am
One thing I love about real estate is the portfolio diversity it affords you. Also it makes it much harder to overspend on something big in your life. Liquid assets (speaking to after tax mostly) are a few clicks away from being cash and you can spend it on something you may not need. A property like that with a paid off mortgage still takes more work to sell and has great numbers financially given the low cost to you. If sh-t really hits the fan (lost job, zombie attack, divorce, etc) you could have a near rent free place to live.
Are you seriously suggesting tying up a bunch of your money in an illiquid asset just so that you can avoid the temptation of wasteful spending? Someone who needs a prop like that probably doesn't have the wherewithal to keep up a reserve to cover unexpected condo expenses or a period without a tenant.

cherijoh
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Re: Sell or Keep a rental condo

Post by cherijoh » Sun Jan 14, 2018 9:23 am

michaelsieg wrote:
Sat Jan 13, 2018 12:32 am
On a 55k investment in 2010, you have been netting about 10.5k income /year for the past 7 years. I would look at this as an investment that creates cashflow, which has no correlation or very little correlation with equity markets. To be honest with you, I can't think of a better investment generating that kind of cash flow right now. To generate this kind of a secure cashflow (even if you reduce the math of your rental income to an average of 10 months per year due to renter changes) you would have to invest about 400k in the total bond market index (current SEC yield 2.61%) - so I would vote to keep it. Also, I would not raise the rent if you have a good renter and enjoy the cashflow your investment generates.
You should reread the OP. It starts off with:
So I’ve been a landlord for about a year.

Beachdrinks
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Re: Sell or Keep a rental condo

Post by Beachdrinks » Sun Jan 14, 2018 1:49 pm

cherijoh wrote:
Sun Jan 14, 2018 9:17 am
Beachdrinks wrote:
Sat Jan 13, 2018 5:13 am
One thing I love about real estate is the portfolio diversity it affords you. Also it makes it much harder to overspend on something big in your life. Liquid assets (speaking to after tax mostly) are a few clicks away from being cash and you can spend it on something you may not need. A property like that with a paid off mortgage still takes more work to sell and has great numbers financially given the low cost to you. If sh-t really hits the fan (lost job, zombie attack, divorce, etc) you could have a near rent free place to live.
Are you seriously suggesting tying up a bunch of your money in an illiquid asset just so that you can avoid the temptation of wasteful spending? Someone who needs a prop like that probably doesn't have the wherewithal to keep up a reserve to cover unexpected condo expenses or a period without a tenant.
Cherijoh do you live in a high or low cost of living area?

mass_biker
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Re: Sell or Keep a rental condo

Post by mass_biker » Sun Jan 14, 2018 2:24 pm

Can someone help me with this analysis - comparable framework to the OP.

Purchase price = 500k
Improvements = 300k
Have rented it out for 8 years, so assume depreciation is as follows
500k + 300k = 800k over 30 years - so...800/30 = 27/year x 8 = 216k in total reduction of basis
Thus, current basis is: 800k - 216k = 584k
If I sell it today, I'll get 1m in proceeds.
But as I have not lived in it for 2 of the past 5 years, taxes owed are:
LTCG on 416k (1m - 584k = 416k) - assume 20% on LTCG = 20% x 416k = 83K in taxes
But my current mortgage is 300k
So, to calculate my all in net proceeds (once the mortgage is cleared)

1m in proceeds
- 83k in taxes on the gain
[u]- 300k to pay off mortgage[/u]
617k cash in hand?

Put another way, is the 83k tax I pay the friction that keeps me from rolling this into another investment property? vs. taking 617k and investing in a simple 3 fund boglehead portfolio?

corgimom11
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Re: Sell or Keep a rental condo

Post by corgimom11 » Sun Jan 14, 2018 8:26 pm

My parents were in a similar decision. They had purchased a modest condominium for me to live in while I was going to college 10 years ago. After I moved out after purchasing my first home, they decided to try and rent it since we felt the housing market in our area still had a lot of room to move up. They had a tenant stay for close to 3 years and recently moved out.

I helped them run the numbers and while the rental cash-flowed, it was the appreciation of the unit driving most of the "profit." I told them that this "profit" was not promised tomorrow and you never know what will happen with the housing market.

They made the decision that they were ready to cash out, especially as it was proving difficult to manage the property when they lived 3 hours away and with the realtor's projections, they were going to effectively double their investment (not including the "savings" that we had when I stayed there vs. paying for apartment or housing on campus during college).

It listed today. They already have a full cash offer, with a multitude of showings between tonight and tomorrow.

They will be using the proceeds to pay off their home as they prepare for retirement.

DVMResident
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Re: Sell or Keep a rental condo

Post by DVMResident » Sun Jan 14, 2018 9:11 pm

amd555 wrote:
Fri Jan 12, 2018 4:14 pm
bought in 2010. Bought a house in 2016 and started renting...paid $55k...market value right now is minimum $150k-$200k...I would also avoid being hit with cap gain taxes on the sale
You got all the relevant information: sell within the cap gains exclusion. The ROI is ~okay for RE, but I think you're not being appropriately compensated for the risk you're taking on.

+1 sell vote

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Cycle
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Re: Sell or Keep a rental condo

Post by Cycle » Sun Jan 14, 2018 9:12 pm

Sell. I'm planning to stop my real estate empire at just the one duplex we owner occupy.

KATNYC
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Re: Sell or Keep a rental condo

Post by KATNYC » Mon Jan 15, 2018 12:16 am

+1 to sell.
We did not enjoy being landlords. Can you sell the condo & parking space separately to maximize profit?
Parking spaces in NYC are at a premium: https://www.brickunderground.com/blog/2 ... king_spots
http://www.theparkingclubcondo.com/about/

amd555
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Re: Sell or Keep a rental condo

Post by amd555 » Mon Jan 15, 2018 9:13 am

Mimmz wrote:
Sat Jan 13, 2018 12:05 am
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
So I’ve been a landlord for about a year. I have a condo in Chicago taht I bought in 2010.
I've been a landlord now for three years, of a bank-owned condo I bought in Chicago in 2010, so I feel like I can relate.
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
I am considering selling as the market is strong and I can get a premium as I have a deeded garage space. I paid $55k for the condo in 2010 and the market value right now is minimum $150k-$200k. The garage is very, very rare for the area. There is some street parking but the parking is not easy to find.
I bought my condo in the latter price range you mentioned in 2010, when it came with a deeded heated garage spot, and then I bought a second spot in the same building a few years later. Most condo buyers I know in Chicago expect a garage spot - it was zero degrees here the other day...
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
...and no depreciation to payback.
I don't think that's accurate. My understanding is that you will still owe depreciation recapture if your condo was used to generate rental income, and that you will be assessed the recapture whether you claimed the depreciation or not. Bigger Pockets would probably yield a more confident result.
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
Thoughts?
Psh, I'm hanging on for the ride - when HQ2 comes and solves that whole pesky fiscal crisis, and Musk builds the high speed tunnel to O'Hare, we'll make it up to coastal city prices!
Hello Chicagoaon,

Nice weather today. My condo is West rogers Park, Devon and California area. That part of the market took a nice shaving from the crash. Its a 15 unit building from 1920s. It was a gut rehab in 2006. It has all stainless steel appliances, washer dryer in unit and now a 10 yr old ac/furnace. Looking at things realistically, the Chicago rental market is getting weaker. I am charging a premium because of the spot. It's a 2 car garage. Most of my neighbors that rent out units charge $1150ish. I will say most of the neighborhood is street parking so parking will be the selling point.

amd555
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Re: Sell or Keep a rental condo

Post by amd555 » Mon Jan 15, 2018 9:16 am

quantAndHold wrote:
Sat Jan 13, 2018 2:24 am
Can you sell the condo and keep the parking space? How much rent could you get for the parking space alone? I can see why you wouldn’t want to manage a condo, but there are no appliances to break in a parking space.
Top be honest, the standalone garage rental would net me about $200/mo but selling it separately I lose the marketability of the condo. The comps without a garage or parking are closer to 120ish-130ish. The garage realistically adds close to 30-40k in value due to how rare it is.

amd555
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Re: Sell or Keep a rental condo

Post by amd555 » Mon Jan 15, 2018 9:21 am

corgimom11 wrote:
Sun Jan 14, 2018 8:26 pm
My parents were in a similar decision. They had purchased a modest condominium for me to live in while I was going to college 10 years ago. After I moved out after purchasing my first home, they decided to try and rent it since we felt the housing market in our area still had a lot of room to move up. They had a tenant stay for close to 3 years and recently moved out.

I helped them run the numbers and while the rental cash-flowed, it was the appreciation of the unit driving most of the "profit." I told them that this "profit" was not promised tomorrow and you never know what will happen with the housing market.

They made the decision that they were ready to cash out, especially as it was proving difficult to manage the property when they lived 3 hours away and with the realtor's projections, they were going to effectively double their investment (not including the "savings" that we had when I stayed there vs. paying for apartment or housing on campus during college).

It listed today. They already have a full cash offer, with a multitude of showings between tonight and tomorrow.

They will be using the proceeds to pay off their home as they prepare for retirement.
Love that story. The key is to get a great deal on a property, in the right place. If I decide to sell, it will be in spring so that I can fix up the condo and then sell it. Having it be a rental for a year plus, I know it will have some painting and a new bathroom vanity/sink. Not a big deal IMO.

amd555
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Re: Sell or Keep a rental condo

Post by amd555 » Mon Jan 15, 2018 9:24 am

michaelsieg wrote:
Sat Jan 13, 2018 12:32 am
On a 55k investment in 2010, you have been netting about 10.5k income /year for the past 7 years. I would look at this as an investment that creates cashflow, which has no correlation or very little correlation with equity markets. To be honest with you, I can't think of a better investment generating that kind of cash flow right now. To generate this kind of a secure cashflow (even if you reduce the math of your rental income to an average of 10 months per year due to renter changes) you would have to invest about 400k in the total bond market index (current SEC yield 2.61%) - so I would vote to keep it. Also, I would not raise the rent if you have a good renter and enjoy the cashflow your investment generates.
One thing to add. My wife and I both work FT. Between my wife and I we make appx $135k gross salaries. The renal income could push into a higher tax bracket over time.

cherijoh
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Re: Sell or Keep a rental condo

Post by cherijoh » Mon Jan 15, 2018 9:30 am

corgimom11 wrote:
Sun Jan 14, 2018 8:26 pm
I helped them run the numbers and while the rental cash-flowed, it was the appreciation of the unit driving most of the "profit." I told them that this "profit" was not promised tomorrow and you never know what will happen with the housing market.
+1

michaelsieg
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Re: Sell or Keep a rental condo

Post by michaelsieg » Mon Jan 15, 2018 10:25 pm

Between my wife and I we make appx $135k gross salaries. The renal income could push into a higher tax bracket over time.
I would say a higher tax bracket is a good thing, as it means you earn more :happy - Don't forget, your income will still be taxed at the same rate, the higher rate just applies to the amount past the lower bracket you are currently in.

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Pajamas
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Re: Sell or Keep a rental condo

Post by Pajamas » Tue Jan 16, 2018 9:33 am

WanderingDoc wrote:
Sat Jan 13, 2018 12:27 am
Pajamas wrote:
Fri Jan 12, 2018 4:52 pm
amd555 wrote:
Fri Jan 12, 2018 4:14 pm
Assuming I can get 7% return on my cash after sale
That's a critical assumption that might or might not happen. Certainly you would have to accept risk in trying to achieve that.
Exactly. He/she might get a -7% return in the market. While, you will continually see positive rental income and appreciation over time im Chicago (barring nuclear devastation or other untoward event).

The "positive rental income and appreciation over time im Chicago" are certainly not guaranteed, either. There is a great deal of risk in that, as well.

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