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Old 05-24-2021, 07:57 PM
 
5 posts, read 914 times
Reputation: 10

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I purchased a condo right before the big recession and saw a big decline in the value of the condo. I have been able to hold on to it through the worst of times. Now I have been blessed and was able to purchase a home while renting the condo. The condo has now surpassed what I bought it at and pretty close to what I am hoping to get from it. Would it be best to sell now, consolidate debt, and pay down the mortgage on my home or better to leave it as an investment? Also, I would be interested on thoughts on next year's housing market? Sometimes I hear recession and sometimes I hear it will keep increasing. If home prices do increase, it would be worth selling next year. And my tenants are great so I don't mind continuing to rent to them.
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Old 05-24-2021, 08:35 PM
 
296 posts, read 129,865 times
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Great tenants i wouldn't sell. Hard to come by and if they were good through covid I can't see how things could get worse. Heloc or just continue collecting and saving up to but another
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Old 05-24-2021, 09:28 PM
 
8,609 posts, read 27,755,971 times
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Did the same thing. I plan to keep it, as long as I can.
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Old 05-25-2021, 11:38 AM
 
Location: Tijuana Exurbs
4,300 posts, read 11,193,424 times
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If the rent you're receiving covers your condo payments, if the rate on your mortgage is low, keep it.

We're in for a few years of higher inflation. How high? Not sure. But when we come out the other side, you'll own two properties at inflated values, with one or two mortgages that have been inflated away to much less.
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Old 05-25-2021, 12:14 PM
 
Location: San Diego, CA
2,474 posts, read 1,222,491 times
Reputation: 4156
Quote:
Originally Posted by kettlepot View Post
If the rent you're receiving covers your condo payments, if the rate on your mortgage is low, keep it.

We're in for a few years of higher inflation. How high? Not sure. But when we come out the other side, you'll own two properties at inflated values, with one or two mortgages that have been inflated away to much less.
Not to mention if the condo was bought before the Great Recession the mortgage is anywhere from a third to half paid off. That thing will be a huge cash cow before you know it.

For that reason, and the fact you great tenants, I wouldn’t sell unless absolutely necessary.
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Old 05-26-2021, 02:24 PM
 
5 posts, read 914 times
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Sounds like the consensus is to keep renting the unit, contingent on certain things. Here is a little more information.

Rent covers expenses except $200/mo (which I can afford).

Tenants are good but what if they decide to move out? (Especially if good tenants are hard to come by.)

What if there is another recession? I wouldn't want to lose the increase that we are seeing now.

What I am having trouble getting over is that if I sell and put the earnings on the house, I would save almost $100k in interest and I would be debt free 5 years sooner. Especially since the condo was not my best investment (I bought when prices were high).
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Old 05-26-2021, 03:37 PM
 
8,609 posts, read 27,755,971 times
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it just depends on your goals. If your goal is to pay off your primary residence and be debt free, then selling to accomplish that is not a bad idea. Personally I would rather carry a mortgage as long as I am working, I don't really know what I would do with the cash otherwise, I am not keen on dumping any more into the similarly overvalued stock market. My goal is to pay off the rental and have a permanent income in retirement, as well as an asset I can borrow against if need be.
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Old 05-26-2021, 06:24 PM
 
Location: Sandy Eggo's North County
3,676 posts, read 1,391,671 times
Reputation: 5259
Quote:
Originally Posted by axescot View Post
Sounds like the consensus is to keep renting the unit, contingent on certain things. Here is a little more information.

Rent covers expenses except $200/mo (which I can afford).

Tenants are good but what if they decide to move out? (Especially if good tenants are hard to come by.)

What if there is another recession? I wouldn't want to lose the increase that we are seeing now.

What I am having trouble getting over is that if I sell and put the earnings on the house, I would save almost $100k in interest and I would be debt free 5 years sooner. Especially since the condo was not my best investment (I bought when prices were high).
This is different. If your rental is costing you $2400 a year, then dump it. We we're hoping you bought it low, and it was generating $5000 surplus a year. Did you buy your house, at the top of the market, too?
Seriously, if your rental is costing you to have, then either raise your rent, or sell it. It makes no sense to keep a losing deal. (Unless you've made TONS of dough in other investments, and you need a "loss" to keep from getting murdered in taxes...)

Putting the profit from the sale, into your home is ok to do, AS LONG AS YOU PLAN ON LIVING THERE A LOOONG TIME. Providing you have all your other expenses covered, for 2 years, then go ahead. (Just remember, you aren't gonna get rich by saving. You get rich by taking risks that pay off.)
Good luck with whatever you choose.
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Old 05-26-2021, 07:25 PM
 
8,609 posts, read 27,755,971 times
Reputation: 4922
Quote:
Originally Posted by NORTY FLATZ View Post
This is different. If your rental is costing you $2400 a year, then dump it. We we're hoping you bought it low, and it was generating $5000 surplus a year. Did you buy your house, at the top of the market, too?
Seriously, if your rental is costing you to have, then either raise your rent, or sell it. It makes no sense to keep a losing deal. (Unless you've made TONS of dough in other investments, and you need a "loss" to keep from getting murdered in taxes...)
I actually think there is a nuance here. As long as the tenant is paying the interest and monthly expenses like HOA fees, insurance, then your 200 'loss' is really just contribution to equity in an asset you own. Just like a 401k contribution. The non-equity expenses are the same as rent, they cost money and you gain no equity. The problem I have with taking negative cash flow (which is really what this is) is that you are not going to be able to use the profits from the rental income to fund maintenance (although it being a condo, that may not be a big amount). I took a small amount of negative cash flow initially, and am about to take another hit (house needs a roof) but in the nearly 4 years I've rented it out, my tenant has paid 100% of the non-equity expense and probably 20k-25k in principal on the loan. in the same time the house has appreciated for nearly 10x that amount. Refinancing and raising the rent can add up fast and you can be in the black if you need to be. It's just like any business - there is a difference between debt service to an appreciating asset vs. funding operations expense. Capitalism is all about leverage, and right now, you've got it.

Last edited by NYSD1995; 05-26-2021 at 07:35 PM..
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Old Yesterday, 11:29 AM
 
508 posts, read 254,104 times
Reputation: 562
It's a loser. You haven't accounted at all for repairs, vacancy, commissions... Consider how much cash you would need if the current tenants moved out, even with proper notice..
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