Newbie here! Asking a basic question and need advice if I should keep the townhome or sell it( If anyone can give any formulas that I should consider please let me know)
The current value of the townhome as per Zillow is 690K(bought it for 540K)
Current loan balance=404K , interest rate = 2.99% , term=15 years, taxes per year=7K, HOA fees = 155/month
Location - metro area, good school district, parks, and trails around.
The townhomes in the area are renting for $2500-$2800
I am planning to purchase a single-family home that is around 1.8M. Now, Is it worth keeping the townhome with all the above fees considering I will be paying all those fees for the single-family house also?
Thanks for your help!
Sell as soon as possible. This isn't a rental property. By my quick calculations, including the mortgage payments, you would be looking at about $1200/month negative cash flow.
You have almost $300k in equity trapped, to be released in your custody once sold.
There's no question this is a sale.
@Sirisha Kusuma Where you are the purchase to rent multiple is not in your favor if you want cash flow. I would learn to underwrite--attend a podcast, youtube, whatever and consider investing OOS. In my view it is not worth keeping the townhome the return does not offset the risk.
Sell or use a HELOC. The only bonus on keeping it is the appreciation. I imagine in a few years it'll go up another 100-200K(just speculation). 200K+ would be plenty to invest. You could potentially have around 1M in property with a COC conservatively of 6-8% you'd be set. Did you owner occupy this town home?
@Caleb Brown -What is COC?
Did you owner occupy this townhome? - Yes. (Is there a reason you are asking this?)
Hello @Sirisha Kusuma and welcome to BP forums!
At a quick glance, it doesn't seem the rental income would cover mortgage and expenses for the townhouse.
With the market being as hot as it is in so many places (particularly residential areas with low inventory and great schools), you may want to look into unloading this one. Of course, you'd have to factor in the cost of selling - i.e. transfer taxes, title fees, broker fees, etc. - but it could be the best option as you move forward to your next home.
Best of luck to you moving forward!
@Sirisha Kusuma cash on cash return. Was curious if you bought it as a rental way back or owner occupied.
Welcome to BP @Sirisha Kusuma
I would definitely sell I am not a fan of keeping a property that has negative cash flow just for appreciation.
Best of luck and this is a great problem to have!