I would love your advice. Should I keep this property or dump it?
I have a condo in Algonquin Illinois (3 bed, 2 bath, 1890 sq/ft) that I had bought for $265k in 2006.
The current comps for this property are around 185k - 195k.
Ten years later the property is still 70k - 80k underwater.
This property used to be be my main residence, but I have moved and I am now renting it.
Total expenses = $1835.84
Rent = $1700.00
I losing $135.84/month
With this property still underwater 70k - 80k and I am paying an extra $135.84/month. Would you keep this place or would you dump it?
Thanks for your advice!!
Do you have the ability to raise the rent? The gap is small enough that I'd try to close it in another way before selling if I were you and think of it as you tenant paying your debt while you wait for the market to rebound further.
I think smaller Midwest markets are about 2-3 years behind the rest of the country in terms of rebounding from the downturn.
It sounds like you're still enough under water where you'd have to bring money to the table to sell the place so that makes selling potentially more expensive than breaking even or losing $100/mos (my guess is you'll have to pay more than $1,200 out of pocket to close?)
Unless this is causing a severe financial hardship, it may be better to hold on a bit longer til you can at least break even; keep raising rent in the meantime
I own a number of rental properties in the area. I would hold it and I agree with @Ericka Grant the difference is very small. The values have been increasing over the past year, making buy n holds difficult to find, but not impossible. I feel for you as you had bought at the height of the market.
$1,700 a month is good rent. My first goal would be to lower expenses. Shop the insurance, refinance the loan and try to reduce the expenses.
One way to reduce expenses in Illinois is word your lease to make the tenant responsible for the Real Estate Taxes. You can then apply, through your tenant, for the owner occupied excemption on the real estate taxes. This can be applied for at any time but will only take effect in January following the submission
The first goal is to reduce the expenses ASAP. Then if you decide to sell you have a better looking package for a potential buyer.
Insurance. Right now it looks like Shelter Insurance has the best prices in Illinois for rental dwellings. I reccomend Mark Wojick in Belleville, IL.
My contact information is below if you have any questions.
Hard to refinance when you are so much underwater..
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