Buying & Selling Real Estate Discussion

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Becca F.
  • Rental Property Investor
  • San Francisco
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Should I sell or rent out my condo?

Becca F.
  • Rental Property Investor
  • San Francisco
Posted Jul 28 2022, 12:00

I currently have a 1 bedroom 1 bath condo on the market. It's near Lake Merritt in Oakland. It was my primary residence (I moved and bought a different home). My listing expires on August 23. I had lots of showings and a few near offers. It's in a walkable location to the lake, shops, restaurants, great for commuting (near freeway and bus stop). The main comments were buyers like the unit but not the freeway noise from I-580 (I have double paned windows and I hardly noticed the noise when I lived there with the windows closed) and the high HOA fee. There is a gated garage with one assigned parking space, a small storage unit/locker, pool, outdoor community area with tables and chairs, on-site laundry facility. I had new kitchen cabinets, quartz countertops, built in microwave, new bathroom vanity installed. Before I put it on the market on the advice of my realtor, I had the old living room carpet and kitchen linoleum removed, laminate floors installed and new baseboards in living room, kitchen and entry way. A new stove was also put in. For those not familiar with the Bay Area, the HOA fees are high in Oakland and in the Bay Area (ranging from a low of $240 that I've seen to over $735).

Here are the numbers:

Purchased in October 2019: $360,000 (not renovated)

Current list price: $345,000 (initial list price $395,000 on 4/26)

Mortgage left: $267,794 (before I make the August payment)

Monthly payment: $1687 (includes insurance and property tax)

HOA fee: $605 a month

My renovation costs: $17,726 (already paid off over 2 years ago)

The renovations realtor had done recently: $11,742 (to be subtracted from the sale or I pay the renovation company that amount within a year)

There was a special assessment last year of $1600 for elevator repair. The complex was built in 1968 so I anticipate more repairs in the future.

From the numbers the lender ran, if it sold for $350,000 I would have netted about $50,000 to $51,000 (after commission, mortgage pay off and the renovation costs). Since it's now at $345,000 I would be netting less. My rough calculations show if I sold at $320,000 I would net about $24,000. 

If I rent it out:

To cover my monthly payment and HOA minimum rent: $2300 (exactly $2293 rounded up, not including property management fee)

Potential rent $2000 to $2600 (from talking to property management company and photos I've sent, who can't do anything until the listing expires). 

Management fee: 8% (about $194)

I don't want to post the listing on a public forum since it's still on the market. Should I continue to lower the price, have a fire sale and extend my contract with my realtor, go with a different realtor when the listing expires or rent it out (until the condo market improves within the 5 year time frame so I could still use the 2 out 5 year capital gains exclusion since I lived in it)? My concern is there are no guarantees with rent and that it could sit vacant, especially if I'm trying to get $2500 to $2600. I appreciate any suggestions. 

Oakland, California

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Taylor L.
  • Multifamily and Self Storage Investor
  • Richmond, VA
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Taylor L.
  • Multifamily and Self Storage Investor
  • Richmond, VA
Replied Jul 28 2022, 14:28

Does the association have rental restrictions? Many do, but not all. Is the real estate market stumbling there generally?

How about you, what are your goals? Do you need sales proceeds in the short term?

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Becca F.
  • Rental Property Investor
  • San Francisco
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Becca F.
  • Rental Property Investor
  • San Francisco
Replied Jul 28 2022, 17:45

@Taylor L.

Thanks for the reply. I don't believe the HOA has rental restrictions but I will double check. About 30% of the units are rentals. The Bay Area has been in a seller's market since 2018 (when I moved here) with the market peaking in 2019 for condos. I had to bid over another buyer for that unit. Homes would get multiple offers with sometimes the first day they hit the market with buyers waiving inspections and appraisals. It's not uncommon for all cash offers. A 3 bedroom 2 bath single family home is around $800,000. So condos were in the $750,000 (for a 3 bedroom) and under range.Condos were getting offers within 2 weeks if it was in a highly desired area or renovated condition up until late March/early April 2022. It slowed down considerably when the interest rates increased and condos seem the hardest hit, although home prices are still high even with the price reductions. Many condos are on market for 30 days or longer now. People who have lived in their homes for a long time, prior to 2008-2010 saw their homes appreciate a lot so they do well financially when selling or renting it out at market rate.

My goal is not to keep losing money every month. $2300 is a large amount of money to be out each month and now I'm making double mortgage payments (my current home and this condo) in addition to my rental property in the Midwest (which is cash flowing so renters are paying my mortgage payment) and a HELOC payment (HELOC used for a renovation on a California rental). If I leave the condo vacant the city of Oakland has a $3000 vacancy tax a year. I need sales proceeds in the short term and could probably do 6 months more of monthly payments but that will sting financially.

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Replied Jul 28 2022, 18:14

Find out if there are rental restrictions.  If you can rent it at the high end for a few years, it might be worth it BUT California rental laws are crazy and you may have problems getting the person out if you want to sell it down the road.  I'd try listing it with another realtor.  Look for one who has sold a unit recently in the building and who sold it quickly.

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Kenna De Guzman
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Kenna De Guzman
Replied Jul 28 2022, 20:14

Have you looked into Mid-term rentals to professionals? You can post it on furnishedfinders for travel nurses who would stay there for a 3 month contract minimum. 

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Replied Jul 28 2022, 20:28

Get out now the market is turning. Reduce asking and break even.better than losing more if you wait.

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Osazee Edebiri#5 General Real Estate Investing Contributor
  • Realtor
  • San Jose, CA
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Osazee Edebiri#5 General Real Estate Investing Contributor
  • Realtor
  • San Jose, CA
Replied Jul 29 2022, 13:01
Quote from @Becca F.:

@Taylor L.

Thanks for the reply. I don't believe the HOA has rental restrictions but I will double check. About 30% of the units are rentals. The Bay Area has been in a seller's market since 2018 (when I moved here) with the market peaking in 2019 for condos. I had to bid over another buyer for that unit. Homes would get multiple offers with sometimes the first day they hit the market with buyers waiving inspections and appraisals. It's not uncommon for all cash offers. A 3 bedroom 2 bath single family home is around $800,000. So condos were in the $750,000 (for a 3 bedroom) and under range.Condos were getting offers within 2 weeks if it was in a highly desired area or renovated condition up until late March/early April 2022. It slowed down considerably when the interest rates increased and condos seem the hardest hit, although home prices are still high even with the price reductions. Many condos are on market for 30 days or longer now. People who have lived in their homes for a long time, prior to 2008-2010 saw their homes appreciate a lot so they do well financially when selling or renting it out at market rate.

My goal is not to keep losing money every month. $2300 is a large amount of money to be out each month and now I'm making double mortgage payments (my current home and this condo) in addition to my rental property in the Midwest (which is cash flowing so renters are paying my mortgage payment) and a HELOC payment (HELOC used for a renovation on a California rental). If I leave the condo vacant the city of Oakland has a $3000 vacancy tax a year. I need sales proceeds in the short term and could probably do 6 months more of monthly payments but that will sting financially.


You clearly know more than you are giving yourself credit for in some of your previous posts. To me this is more of a math equation since your condo is in a good part of Oakland. ROE and ROI of keeping vs. renting it. Calculate those numbers to give you a method of making a decision that is less emotion and more objective based.

Real Estate Agent CA (#02145259)

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Osazee Edebiri#5 General Real Estate Investing Contributor
  • Realtor
  • San Jose, CA
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Osazee Edebiri#5 General Real Estate Investing Contributor
  • Realtor
  • San Jose, CA
Replied Jul 29 2022, 13:05
Quote from @Kevin Maher:

Get out now the market is turning. Reduce asking and break even.better than losing more if you wait.

 I like your idea of @Becca F. renting to mid-term renters, but saying the market is turning and she get out is contradictory to that. She really should only sell if she feels she can get a better return on her investment moving the funds into another property.

Also, even if the market is potentially turning, what do you believe it is turning to @Kenna De Guzman? Because if it turns won't that mean rents would go up since less people can buy homes?

Real Estate Agent CA (#02145259)

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Becca F.
  • Rental Property Investor
  • San Francisco
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Becca F.
  • Rental Property Investor
  • San Francisco
Replied Jul 30 2022, 20:48

@Theresa Harris

I looked up rents in that area on Rentometer and average rent is $2032 and median is $2050 for a 1 bedroom, 1 bath. I see some listings for $2500 on Zillow Rents but they've been on there for 30 or more days. I going to assume that I wouldn't be able to get $2500 to $2600. I see new apartment complexes asking up to $3000 a month but they have all the amenities - in unit washer/dryer, gym, etc. If I were to get $2050 a month, I'm operating on a $250 to $300 month loss to cover my monthly payment and HOA fee. For 12 months that wouldn't be that bad. Beyond that, that loss would start adding up if I can't raise the rent a significant amount, assuming no other problems with the tenant or major repairs.

I asked the property management company and there is a 1 to 1.5 month relocation fee to get a tenant out if I want to sell the unit. That fee depends on how many people are living in the property. I would assume that no more than 2 people would live in a 1 bedroom - hopefully there's not 4 people living in that small of a space.  It's worse for people renting single family homes. Sometimes they need to pay $10,000 to $20,000 to get a tenant out of a house, if for example the owner wants to move back in. I just keep hearing the horror stories so I don't know how successful Oakland landlords are. 

@Kenna De Guzman

I asked the management company for the HOA and she said rentals have to be 30 days or over. As far as travel nurses or professionals, it sounds like a good idea. I did take a look at FurnishedFinders. There's a hospital within a few miles. I have a full time job so I'm not sure how much time that would take to manage a mid-term rental with more frequent turnover. If I was renting out long term I would definitely go with a property management company.

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Drew Sygit#2 Managing Your Property Contributor
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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Birmingham, MI
Replied Aug 1 2022, 04:44

@Becca F. If the market turns, you're unlikely to see a recovery in 3 years. Most real estate cycles last around 10 years.

Not that difficult to DIY manage mid-term rentals. 

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Matthew Crivelli
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Matthew Crivelli
  • Lender
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Replied Aug 1 2022, 05:15

You bought the property for 360k before the major boom and now you have it listed for less after you completed repairs? This property sounds more like a boat purchase and I would be trying to dump it ASAP. Operating at a net loss will likely not change after 12 months, even if rents go up you will still have to deal with rising HOA fees. I would clean my hands of this mess. @Becca F.

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Becca F.
  • Rental Property Investor
  • San Francisco
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Becca F.
  • Rental Property Investor
  • San Francisco
Replied Aug 1 2022, 09:18

@Matthew Crivelli

Thanks for your advice. I bought it as a primary residence and was intending to live in it for at least 5 to 7 years. I was not happy living there at the 2 year point and kept analyzing whether I should stay for the long term or look for something else. My reasoning was that generally home prices continue to go up so I wound up making an offer on another place. This was still during the sellers market. It was going to be extremely difficult to show the condo while I was living there with a pet so it was easier to move out then have it on the market. In hindsight some of the renovations recommended by the realtor probably weren't necessary (new baseboards, maybe the new laminate floor) cost me valuable weeks before the interest rates went up and buyers started getting scared. It was still in the sellers market stage when I put it on the market at the end of the April but rapidly shifted in a matter of weeks. 

Most of the advice about being an Oakland landlord from a few landlords I've communicated with is don't do it unless you have high risk tolerance. I've heard other landlords say they had tenants stop paying rent and it cost them thousands of dollars in legal fees to get those non-paying renters out. Oakland is very tenant friendly. Now you can't discriminate against someone with a criminal background (with the exception of sex offenders) unless you're living on the property like a duplex. This is in the city ordinance, which is pretty crazy to me. 

The other opinions I hear are: Bay Area properties appreciate over time, you're being a pessimist and you could get a good tenant in, etc. Just wait it out and you'll start cash flowing but wait it out for how long? 

Operating at a $300 month loss is going to affect my daily living in 2 years. I won't be able to pay the the mortgage on an existing rental property (not in California) that I have that's cash flowing. I own another rental property with lots of equity but I have a HELOC on it to pay for renovations. I was half joking with a lender friend- I'll be out on the street with a cardboard sign like the homeless people in the Bay Area while I own 2 rental properties.

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Conner Olsen
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Conner Olsen
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Replied Aug 1 2022, 09:48

@Becca F. A furnished MTR could be an option for you, but you'd need to look deeper into the tenant laws. Talk to someone in Oakland doing it and see how they mitigate risk. Personally I'd sell, you held it during the largest home value appreciation period of 2020-21 and you'll end up losing money on the deal once you factor in lost equity.

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Matt K.
  • Walnut Creek, CA
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Matt K.
  • Walnut Creek, CA
Replied Aug 1 2022, 23:36

To the causal observer I think the biggest hurdle you're going to have selling or renting is demonstrating the value of the extra sqft.

I'm familiar with the area and probably the complex based on the description... and even though a studio vs 1 bd is quite obvious in person ... It might be hard to communicate that extra space in an ad.

Oakland has made it tough on landlords and they aren't viewed in the best of light no matter how well the property is managed. However it's not impossible, but screening is more important then ever and can still be done with in the boundaries of Oakland's unique requirements...

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Becca F.
  • Rental Property Investor
  • San Francisco
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Becca F.
  • Rental Property Investor
  • San Francisco
Replied Aug 4 2022, 13:03

Hi everyone! I appreciate all your responses. I received an offer and it went into escrow yesterday, with a 21 day close. Hopefully everything proceeds without problems. I will look into mid-term rentals for my soon to be rental (a house) 

I learned two big lessons here: !) Don't buy a condo at the peak of a sellers' market and try to turn it into investment property especially in California. 2) Interview your realtors carefully. The realtor who helped me buy the condo (a different person from the selling realtor) possibly caused me to overbid on the property. He kept throwing out numbers like I'm at an auction to top the other buyer and I had no comps (I checked my previous emails and I kept all the papers related to the sale and I found no comps). It was listed at $325,000 and I paid $360,000. 

I will stick to single family homes (have one that's cash flowing in the Midwest) and for the future, duplex to four plex (mostly likely not in California) 

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Replied Aug 4 2022, 16:18
Quote from @Becca F.:

Hi everyone! I appreciate all your responses. I received an offer and it went into escrow yesterday, with a 21 day close. Hopefully everything proceeds without problems. I will look into mid-term rentals for my soon to be rental (a house) 

I learned two big lessons here: !) Don't buy a condo at the peak of a sellers' market and try to turn it into investment property especially in California. 2) Interview your realtors carefully. The realtor who helped me buy the condo (a different person from the selling realtor) possibly caused me to overbid on the property. He kept throwing out numbers like I'm at an auction to top the other buyer and I had no comps (I checked my previous emails and I kept all the papers related to the sale and I found no comps). It was listed at $325,000 and I paid $360,000. 

I will stick to single family homes (have one that's cash flowing in the Midwest) and for the future, duplex to four plex (mostly likely not in California) 


 That’s awesome!!!! Yea Def.. not in Cali the tenant laws are nuts.