Should I sell a condo with negative cash flow?

2 Replies

Hi all,

I have a 1BR condo in a very desirable location just outside Washington DC (Alexandria, right off King Street). I bought it for $280K in 2006, could sell for $265K, and currently owe $233K.

My main concern is my negative cash flow. My monthly expenses are $1938, and I rent the condo for $1800. My PMI - $159 - will drop in 2 years and I'll have slightly positive cash flow. Each month $400 goes to my principal payment.

I've seen a lot of different opinions on BP. Am I foolish for holding onto this property, or am I on track playing the long game? It's in an amazing community that was just extensively upgraded (everything from front doors to new insulation, siding, etc) so there are no planned assessments.

I also just moved to Alabama and am self-managing. The $400/property tax I'm paying in VA is making me cringe when I compare it to the $100/month I pay here on a similarly priced home.

Cara

You know, that's a very personal question, and I wouldn't say there is any right or wrong answer.  Have you looked into refinancing so you can get the monthly payment down?  

Personally, I'd sell - not just because of the neg cash flow but because I hate condos and their fees.  But do you think that market will rebound?  

Look to see what you could do with the cash that you would have in pocket if you did decide to sell - and see if that option would that be better for your plans than holding onto the property and hoping for the area's prices to increase again.  

Try to keep emotions out of it - you have a plan, as long as that plan makes sense to you, and as long as this property fits within your plan, then you're on the right track. 

How did you determine the $1938 monthly expense? If it is just PITI+ HOA fee, your actual cash flow is way more negative than you think. Did you factor in vacancy, capex, repairs, turnover cost (painting, etc?) You may not have had vacancy yet and you may not have replaced an appliance or a water heater yet, but in the long term you will have those expenses, and if they are not factored into your monthly expense calculation, they will be coming out of your pocket.

And then there is the possibility of a special assessment. We had a condo association here that recently decided to replace the stairs on all units, and since there were no reserves they imposed a $10,000 special assessment on each unit. This is the main reason I stay away from condos even if they make sense on paper - and yours doesn't. I would say sell...

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