Emotional connection to a loser deal?

3 Replies

Hello BP Team,

I'm looking for a little advice from the veterans out there.

I've built a team (money people, contractors, Realtor, etc) and working deals as I find to either buy & flip single family (SF) as well buy & hold multifamily (MF). Flips to help pay for the holds.

I have a SF rental due to the crash in 2007... Bought 2004 as primary residence, got married, move to a city 100 miles away and could not sell the house and did not chose to walk away or try & short sale. The home has equity again but only enough to keep me from paying out of pocket at closing.

The rent does not pay the entire monthly cost, financial details below. I've had it in my head to use the home as a means to fund my 2 boys college education in 12+ years.

Home value $180k

Mortgage $162k

Monthly payment $1610. (Pay mortgage insurance).

Rental income $1295

Annual HOA Fee of $350

19 years left on mortgage

Built in 1986 and have done some repairs to AC and roof but neither replaced.

Home is 100 miles away from where I live  (and where I focus my current deals) but I'm in the town often due to work (I still have a regular job in IT Sales).

The home seems to rent well and I've found decent renters, current family is at the end of year 2.

My question is this... Should I stay or should I go. I have some emotional equity and a lot of financial investment in the home that may be clouding my business judgement.

I do gain some tax benefits as I write off the mortgage and repairs but the home still costs me each year. Should I cut my losses now (10 years later) or hold on and reap the (potential) financial reward of sticking it out? 

Any insight is appreciated!

Todd Rigden

Punta Gorda, FL

What's the potential reward? Assuming you're out of pocket $300/mo (not to mention the HOA fee's and any large expenses, insurance, vacancy) if my math is right your "potential" reward will have cost you ($300 * 12 months * 12 years) about $45K.

Sure maybe you slowly inch up rents, drop PMI but just looking at the math it would seem to make more sense to cut bait - I'm not sure I get it.

@Todd Rigden  - we were just in Punta Gorda this weekend.  What a beautiful town and place!!  The wife and I were seriously considering moving there but we didn't see one person under the age of 60 the entire weekend (no offense old folks!).  Anyway, beautiful town and freakin' amazing weather - I'm jealous.  Best of luck!

What interest rate is the current mortgage at?  Can you refinance at a lower rate or do you not have enough equity to do that?

@Travis Hamilton thanks for the reply. Our math is the same and it is time to take my loss like a man!

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