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Old 01-16-2011, 06:27 AM
 
Location: Vermont
5,439 posts, read 16,821,593 times
Reputation: 2651

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We bought a home in 07, no first time buyer credits, have put about 120k in (including down payment) might get half that back and this is on a starter home (at least we have a nice kitchen and bathroom!) . Nice little house but it has gone down a bit I think. We haven't had that professionally evaluated yet but I do keep an eye on the market.

I am sort of mentally checked out of NJ and I am not sure I even see the point of sitting on the house for a few years.

Even if we rent it out we're still not making much of a dent (actually I figure with mortgage,taxes,insurance, and maintenance, plus rent we're about -400 for the month which is how much of a dent we make in the bottom line of the mortgage each month, so we're break even at best and that's not really positive cash-flow).

Then we are relying on the market uptick to get us our investment back. We are talking about a ~400k starter house ...it is not going to be any time soon that a ~400k house is worth 460k IMO. Does it seem to make sense to just get out ? The only potential I see is long term which is not really something we are invested in emotionally/mentally. There is a lot of stress involved in renting too, not something we are that interested in.

Is this a no brainer?

I will throw in a wrench which is that we come back to NJ often and often for a week at a time... obviously right now we stay in our house when we come back ...which would change if we sold or rented it. No grand schemes or ideas on this front really.
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Old 01-16-2011, 07:32 AM
 
1,527 posts, read 4,056,289 times
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What do you mean when you say walk away? Sell it?
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Old 01-16-2011, 09:43 AM
 
Location: Vermont
5,439 posts, read 16,821,593 times
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Yes. there is equity in the house. it's not a fire sale or an upside down situation or anything like that. we have about 120k invested, and will get about 60k back if we sell now... my estimate.
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Old 01-16-2011, 10:02 AM
 
Location: NJ
12,283 posts, read 35,616,548 times
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if you're not underwater and won't have to bring money to the table, why not just sell it? I get that you won't recoup your investment, but real estate (like any "investment") is not a sure thing. i'm not quite understanding what the dilemma is.
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Old 01-16-2011, 11:18 AM
 
Location: NJ
17,574 posts, read 46,033,396 times
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Quote:
Originally Posted by tahiti View Post
if you're not underwater and won't have to bring money to the table, why not just sell it? I get that you won't recoup your investment, but real estate (like any "investment") is not a sure thing. i'm not quite understanding what the dilemma is.
Agreed. Sell and get out. Not worth hanging on and dealing with it in the hopes things turn around.
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Old 01-16-2011, 11:32 AM
 
Location: Hackensack, NJ
777 posts, read 2,372,559 times
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You bought during a rough year. Lots of home owners in your situation. Renting doesn't seem to make sense with a negative cash flow each month and the headache of being a landlord.

There might be a modest increase in value over the next few years, but who knows. If you just want to move on with your life and move out of state, it might make sense to sell now.
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Old 01-16-2011, 12:22 PM
 
4,285 posts, read 10,735,110 times
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I would sell it. even if you lose $60,000 on the sale, look at it as if you were paying $1250 a month rent for 4 years.
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Old 01-17-2011, 04:01 PM
 
Location: Glen Rock, NJ
667 posts, read 1,740,166 times
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Quote:
Originally Posted by joe moving View Post
We bought a home in 07, no first time buyer credits, have put about 120k in (including down payment) might get half that back and this is on a starter home (at least we have a nice kitchen and bathroom!) . Nice little house but it has gone down a bit I think. We haven't had that professionally evaluated yet but I do keep an eye on the market.

I am sort of mentally checked out of NJ and I am not sure I even see the point of sitting on the house for a few years.

Even if we rent it out we're still not making much of a dent (actually I figure with mortgage,taxes,insurance, and maintenance, plus rent we're about -400 for the month which is how much of a dent we make in the bottom line of the mortgage each month, so we're break even at best and that's not really positive cash-flow).

Then we are relying on the market uptick to get us our investment back. We are talking about a ~400k starter house ...it is not going to be any time soon that a ~400k house is worth 460k IMO. Does it seem to make sense to just get out ? The only potential I see is long term which is not really something we are invested in emotionally/mentally. There is a lot of stress involved in renting too, not something we are that interested in.

Is this a no brainer?

I will throw in a wrench which is that we come back to NJ often and often for a week at a time... obviously right now we stay in our house when we come back ...which would change if we sold or rented it. No grand schemes or ideas on this front really.
I'll give you my perspective as a potential buyer, just a normal 'joe' looking to buy a home not as investment but a home in 2011. And of course making some assumptions. I think you are right to be worried. When I see a home purchased in 2004-2007 for sale it sends red flags. These specific purchases are homes bought at the height of the market and we all know it. When I see that the owner is also looking to make a profit based on the original sale and in essence flipping the home in a 3-5 year window, I tend to look elsewhere.

Now without referring to your local comps in the are for sold homes in 2010, I would discount your price at least 10-15% from your original 2007 purchase. That is unless the new comps do represent that you bought the home in 07 for a deep discount to begin with and the other current recent sales also support that asking price. I believe the traditional home Y-Y increase prior to the bubble were about 2.5-3.5%. So assuming $400k minus the $40k discount (being somewhat conservative with the 10%), and then adding the 3.5% increase Y-Y on the 'true' cost of $360k (being generous), for 2011, that house should really be at about $410,400 for me to be interested. Now again that's based on a 10% discount. Some folks may think 15-20% is a more realistic starting number.

Then I would take into account how your home/area has been affected with tax increases in the past years and the town's plan of action to limit those increases and reduce costs. I can't imagine too many potential buyers looking at this situation any differently. Just my $.02. Good luck Joe

PS - one more thing, on the 'being checked out', I will say, I essentially paid off my mortgage this year for an 06' purchase losing $100k in equity. It hurt my pocketbook dearly BUT I feel that as far as a family decision it was an expensive but good lesson to have been taught. I/we don't regret leaving that headache.
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Old 01-17-2011, 05:47 PM
 
4,073 posts, read 4,116,883 times
Reputation: 2031
The biggest problem of your house is you. Honestly, what were you thinking when you view your house as investment? If you view it as investment, I would recommend you just sell it. No point keeping a investment that loss money.

My sister in law is trying to get rid of her starter house too and it is in the market for like 6 months and still on it. I think it would be a top sell for starter house. The bank is not willing to lend those those people who no down payment. Those with money will not look at starter home.

Just my 2 cents.
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Old 01-17-2011, 06:20 PM
 
26 posts, read 83,625 times
Reputation: 17
you say..."which is that we come back to NJ often and often for a week at a time." so I do not know where you are if you are as close as Philly or as far as Fla eg.

How often? is there any way you can stay in a hotel for as "often" as you come or with family?

I would say rent it to a family...let them stay there several years.

It doesn't make a dent? But neither does keeping it empty month after month except for the visits you put in. What costs more, your monthly mortgage that you pay for that place to keep it yours while not being there or the cost of a hotel when you are?
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