Loser property

9 Replies

I have a property that I feel is a long term loser and need some advice. My long-term renter is moving and I need to get someone else in next month. This particular property was my very first home and I've learned a lot since that initial mistake.

Background:
- Town home built in 2004
-nice place but in less than desirable area (Clarkston GA)
- Purchased in 2007 for 145K. No money down. Interest free X 10 years with no payment towards principle since that time.
-Moved out in 2009 with steady renters ever since.
-mortgage 553 includes tax and insurance)
- HOA 132 (includes structure insurance)
-Repairs (not atypical from what I see on my other nicer properties).
-easily rents for 1000, but could probably re-rent at 1100 but not worth losing any potential months of lost rent.
-prior management fees: 10% per month as well as full month with new signing and 50% with renewed leases. Would not keep Management company this time around.
Current value: probably 80 K at best case scenario

Options
1. Bank offering another no payment down seven year arm. Kick the can down the road another seven years.

2. Sell, eat 70 K and write off as loss (BIG frikin loss)

3. Short sale, credit takes a major hit and I depend on my credit to make money and do well in other areas.

So there's no equity to pull out? Why do you feel the need to sell? Does the property positive cash flow? Keep it if it does or sell if it doesn't, seven years of appreciation will not save you.

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@Jonathan G. I would not sell and crystallise that loss. Things could look very different in seven years time. Who knows where the property market will be then. We know how things look now however. This is not a good time for you to sell.

@Jonathan G. If it cash flows a couple of hundred a month then holding it is not a drag on your finances. Why rush to realise a large loss when you can punt the problem into the future? Circumstances could be very different in a few years.

no rush , just wondering if there were any other smart options. I have learned so much on this site that I wanted to make sure I had not overlook something.   Even though it does cash flow, it does take a small amount of my time which could be better spent generating higher returns. I'm stuck with it for a while. 

@Jonathan G. Loser properties are on my mind, I am selling my worst performing unit. But my loss on sale after realtor's commission is only $800 plus lawyer's fees. I had put quite a lot of improvements into it but the property was in a bad location and could barely bring in enough rent to cover its rapidly increasing costs (it was a condo in an aging high rise with significant ongoing maintenance costs). The improvements to the unit were a sunk cost and would the same whether I kept it or sold, so that was irrelevant to the decision. Recognizing a loss on sale was a little hard to take, after all the idea here is to make money not lose it. What was harder was acknowledging that we had made a mistake buying it. But I made my peace with that and the loss was small. Losing $70k is quite a different matter. You surely have better uses for $70k than to crystallise a loss on a troubled property. Far better to kick this down the road and see where events take you. Who knows what the value of this property will be in seven years time?