big time losing property - what to do?

11 Replies

I have a condo in Atlantic City that I bought at the top of the market in 2007 for $192,000. It's RIGHT on the boardwalk, 24th floor with a 20 foot wide view of the ocean. Spectacular view.  

Atlantic City has crashed big time and the property has been worth a little under $50,000 for the last few years with no real forecasts of it moving.

I'm renting it but losing about $5,000 a year (condo fees / taxes). I bought it outright so there's no mortgage.

Should I just cut my losses now and take the $50k? I feel like if the market turns around having the view and being right in the middle and on the boardwalk, this property will rebound at some point. who knows?

tyty

if there is no big event in the near future, to make you thing property values will rebound, (I don't think there is) then I recommend selling. you are losing more than $5k per year after including capex and vacancy costs. is it really worth it to lose $5k for ten years so you can sell it for make $50k more? What else could you do with that money? Even the stock market would get you close to 10% if you drop ti in a mutual fund.

Maybe switching it from long term to short term rental might help.  I do not know that market but in some areas the increase would be over the $5000 amount.

If there were enough jobs in the area you could also think about sober living or transitional housing.  

@Gene Fish You’re losing $5K per year with zero debt service? Sell it, get out of it, take the loss, move on. I’m not a believer that “the market will crash!” but a ton of areas have come back and eclipsed those 2006 peak prices. Rent levels have nudged up along with it. If you’re still losing 2.6% of your purchase price per year on this “recovered” (partially, at least) then I’d sell and move on. But that’s me.

Others have good suggestions about assessing the viability of making it an STR but then you either have huge PM fees or a much more “active” investment that *still* might lose money. Not to mention that you’d want to check with the HOA. I have no idea how Atlantic City defines their peak season, etc.

@Gene Fish That's a tough pill to swallow.  Wall Street likes to say "Cut your losses short and let your winners run" I think you should take corrective action before your losses worsen.  

While the market here has stabilized and things are looking better it is impossible to predict.  I have the same issue with the first house I purchased back then if you consider capex, I'm losing about the same amount.  This first house taught me a lot about tenants, home construction, flood insurance and section 8.  I hold it because I didn't want to blow my credit up over it but it hurts. 

There is quite a bit of construction now with new permanent jobs coming. The local university campus moving into the city is helping see the potential and creating lots of activity.  I placed my bets on the recovery here in the last few years.  Everything was way below construction costs and hard to resist.

also @Gene Fish   Airbnb is a legal option here if allowed by the building association.  Usually, it is not

so I am renting through this Rental program that the building has. they rent it out and take a chunk but do all the work. It basically works like a hotel.

If I were to rent it myself I'd likely make a touch more but me spending any time trouble shooting etc is not worth it right now for me for this property (I live 2 hours away and work full time). If I got a property manager it'd be a wash with the hotel thing.

Originally posted by @Gene Fish :

I have a condo in Atlantic City that I bought at the top of the market in 2007 for $192,000. It's RIGHT on the boardwalk, 24th floor with a 20 foot wide view of the ocean. Spectacular view.  

Atlantic City has crashed big time and the property has been worth a little under $50,000 for the last few years with no real forecasts of it moving.

I'm renting it but losing about $5,000 a year (condo fees / taxes). I bought it outright so there's no mortgage.

Should I just cut my losses now and take the $50k? I feel like if the market turns around having the view and being right in the middle and on the boardwalk, this property will rebound at some point. who knows?

tyty

 If you don't need the cash now, no sense in taking a $140k haircut, you can afford to keep bleeding $5k/yr for at least another 30 years rather than taking the painful hit now - in my opinion you will probably see something happen in the next 30 years and see the value go back up.

It sounds like a great place with nice views

^^ lol

thanks

ugh!!!

calling a realtor now.

Send me the info, I'd like to take a look at it

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