My wife and I are buying a house and I was wondering if we should sell our condo. The house we are buying is 0.5 miles away from the condo so we were planning on handling the property management ourselves. We are in Colorado Springs which is a hot market. Here are the numbers.
2 bed/ 2 bath 1,100 sq ft.
Purchased the condo 10 years ago:$128,500 (currently owe $97,000)
Current estimate: $215,000
Mortgage (P&I): $550/mo
Rent Estimate: $1,400/mo
This would become our first investment property if we keep it as a rental. Curious to hear any thoughts as to what we should be considering. Thanks!
@Andrew Wick Hey Andrew! I am a property Manager here in Colorado Springs. I think it’s a wonderful idea to keep your current property as an investment, but I am biased towards investing and I truly believe in this market and this community to sustain well beyond the now! I’d be happy to talk with you further and provide some insight into managing on your own.
@Andrew Wick - It all depends on your goals and situation. If you don't need the money for the other property and you want to get into landlording/investing, it sounds like an ideal situation to hang on to the condo. Rents are very strong in the Springs, but finding a cash flowing property right now is tough and you are sitting on one. I do my own property management as well and with such a great market, finding great tenants isn't that difficult. Good luck with it!
@Andrew Wick - You have yourself in a pretty good predicament here...Personally, I would rent it out and see how it goes. I say this coming from a very similar situation. I bought my first condo with all in costs of $925 (P&I, HOA, Taxes, Insurance, Parking). I rented it out for $1,400/mo and haven't looked back. In fact, I have accumulated 4 more properties since then. The beautiful thing about your situation is that you also have some great equity built up in the property. You would be able to look into a HELOC for future investments, should you decide to keep going. I was able to roll my HELOC into the next 2 properties. At the end of the day, I do not think you have anything to lose in giving it a try. Good luck!
Welcome to BP! I fully agree with what everyone has said but I just wanted to ask a question. Have you talked to your CPA about this decision? I am no CPA and I don't know much about taxes so this is not advice just a question... Have you lived at that property? If so you maybe able to sell it without incurring any taxes. If you get taxed at 15% that is a saving of $32,250. Enough to buy another condo plus all the money you could take out, give or take another $100,000 allowing you to buy 2-3 more condos or investments. Depends how much risk you would like to take on. There are a ton of options for you!
Thanks everyone for your responses and good point on the taxes, Derek! I guess I could always try being a landlord for the next 2 or 3 years (I've lived in the condo for the past 10) and if I don't like it, I could sell before the 3 years is up and avoid cap gains. I really appreciate the insight!
I would consider holding onto it as a rental property. Others here who are more familiar with your area seem to think you're in a good position to keep it as an investment.
I just rented out the condo I moved out of for one year and then sold, but the only reason I would say to sell vs. rent would be if there are any condo rules preventing you from renting/anything that could significantly jeopardize your cash flow. If not, and you don't need the cash proceeds, it looks like it will cash flow very nicely. Since you have the benefit of having lived there for so long, you should also just consider the financial health of the HOA and weigh risk of any large assessments. A great problem for you to be solving!