I have a rental townhouse that makes me an income of 7K a year. This is Maryland (Gaithersburg) area. Market was great few years(2006) back and I could have made a profit of 125K, now I am getting offers that will fetch me 50k in profits. The house is not in a great area and crime going up. I am not sure if ever it will go back to price to 2006 level. I have been renting this house since 1995. Any recommendation if I should just walk away with a price of 215K that I am getting or hold on to get back to year 2006 level(350k). Will real estate will back to that level ever or when?
if you need the money soon I would sell it. If you can wait I would wait 5-10 years and see the prices rise.
@Raj Kumar Sorry Raj but if we had a crystal ball and could predict the future we would already be retired. It's a chance we all take. However, if crime is unceasing, that is not the direction I would want my rental in.
Markets move in cycles and it is very likely we will see prices rise and come to another top as we have seen time and time again. This could mean 5, 10, or 15 years from now, mind you. However, 2006 was a cataclysmic bubble fueled by many things and we likely will not see anything similar anytime soon, with fresh regulations and the after effects of what happened so fresh in so many minds, with many still recovering. Good luck.
So right now you figure you have $50K in equity in the house which earns you $7K/year. If that's $7K net then you're making 14% on the money you have tied up there. That sounds pretty decent to me, but personally I'd be pretty skittish about staying in an area where the crime rate's rising.
FWIW, the real question isn't, "will this property's value go up?" it's "will this property's value go up higher than the rate of inflation?" That's about impossible to predict. I'm certain that at some point in the future your house will again sell for 2006 prices, but by then starter homes might cost a million dollars.
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