Questions on property I rent and have mortgage on

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Questions on property I rent and have mortgage on

Nick Grenon
Member since 2020 · 8 posts · 2 votes

Hello,

I have a condo in NH I bought it for 130k in 2004. Then in 2012 I started renting it out and bought the house I live in. Then in 2013 I refinanced the condo for a lower interest rate (3.5 from 6.84when bought in 2004). I currently owe 56k( mortgage will be fulfilled in Sept 2028) on the property with my mortgage with insurance and property tax is 917 a month and the HOA fees are 300 a month. I rent it long term rental for 1000 a month and current market value is around 115k for the condo.

Do I use the equity in the condo to buy another property or sell and then buy another property.

I would ideally like to buy somewhere south where it is warmer.

Thank you

Nick

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
6y

I don’t like that 3% of the value and a full 30% of your rent is going to the Hoa. And a value 10% lower than it was in 2004 doesn’t speak to an appreciating market. I’d sell but if you don’t set up a 1031 exchange you’re not going to walk with much cash after depreciation recapture. 

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    6y

    I don’t like that 3% of the value and a full 30% of your rent is going to the Hoa. And a value 10% lower than it was in 2004 doesn’t speak to an appreciating market. I’d sell but if you don’t set up a 1031 exchange you’re not going to walk with much cash after depreciation recapture. 

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  • Nick Grenon
    OP
    Member since 2020 · 8 posts · 2 votes
    6y

    @Bill Brandt

    I'm leaning toward that way and buy another property no rent somewhere in like the Florida market. Yeah I would have to put the money towards a property with that 1031 exchange.

    The HOA fees are the real killer and up here the rental market isn't as good for roi

    1Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    6y

    I'd sell that in the spring unless you're cash-flowing strong (but you're not). Sounds like you're proactive which is really important! Maybe a 1031 exchange is in your future? All you need is a qualified 3rd party intermediary and a new property. The timing and location of the market isn't showing appreciation. Time for a new pasture. 

    1Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    6y

    @Nick Grenon refinancing a bad property  and pulling equity out isn't going to make those numbers better!  In addition to that you won't have access to all of the equity in a refi.

    Sell that condo and do a 1031 exchange. That way you can access 100% of the equity and get out from under the HOA.

    Se sure to send a dear John letter to the HOA on your way out.

    The 1031 Investor5140 Reviews
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    1Reply
  • Nick Grenon
    OP
    Member since 2020 · 8 posts · 2 votes
    6y

    @Dave Foster. Thank you Dave for the input this is a very good point. I agree with you and originally it was to far upside down when I bought my house. But In New Hampshire and the Northeast the return isn't as great in other areas so I need to figure out where I want to swap the property to.

    1Reply
  • Greg PowersPro Member
    Real Estate Agent · Manchester, NH · Member since 2013 · 120 posts · 159 votes
    6y

    $300/month for a condo fee is pretty typical in New Hampshire.  And we HAVE seen a lot of appreciation—but prices plummeted in 2008, so things have been appreciating from the bottom of a deep well, and some condo complexes still haven’t climbed back to pre-2008 levels.

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  • Nick Grenon
    OP
    Member since 2020 · 8 posts · 2 votes
    6y

    @Greg Powers

    I agree and condos tend to plummet first and rise last from what I have seen in my limited watching since owning the condo. I believe some in the complex have recently sold for 110k-115k don't know how much higher they will go.

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  • Matthew Stanizzi
    Hollis, NH · Member since 2018 · 60 posts · 43 votes
    6y

    In my opinion it’s a simple decision sell your negative cash flow property and use the dead equity to buy another property that does cash flow.

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