Should I lease or sell my condo in Arcadia, CA?

Question

Hello Everyone,

Would like to seek some recommendation about my situation:

• Bought my condo (detached garage) 3 years ago at $432k in Arcadia, California
• I will be moving to Seattle in a couple of months
• The property management company says I can try to rent it out for $2595 and they charge 5% management fee a month, $130. So my fix cost will be $2250 for mortgage, insurance and tax plus $310 HOA. Which brings me to a total of $2690.
• If I sell my place now, it's valued at $550k and $570k will be the max

Should I rent it out or sell it?

Omar Khan · Answer

@Sandy Fu Currently, your total costs for this apartment exceed the rent you will bring in by $95 (as per your post) i.e. rent $ are less than costs.

You can hold onto this property and "lose" $95/month. I would only recommend doing this if your market is ultra hot and appreciating like crazy. Otherwise, ditch this, roll your proceeds through a 1031 exchange (@Dave Foster can help you) into a newer property.

One word of caution: You might not find better pricing or value in Seattle as that is another over-heated market.

Dave Foster · Answer

@Sandy Fu, for cash flow - bout anywhere but CA. For appreciation - the closer to the beach or the mountains in the Golden State the better. Choose your druthers. Losing 1K a year isn't a bad trade off for $40K of appreciation. But who can count on that - especially if that 1K is needed for food on the table and braces for your kids.

Sandy Fu · Answer

@Dave Pockets, @Omar Khan, @Dave Foster, @Lane Kawaoka - thanks!

I am actually in a market which is kind of overheated as well - Arcadia, California. The problem is if I sell it, the money will be sitting in my bank account depreciating unless I can find something else to invest in.

@Lane Kawaoka I was thinking of investing in Seattle but like you and @Omar Khan said, it's pretty overheated and the rent is worse.

Any idea what / where to invest in, if I decide to sell in California?

Dave Foster · Answer

@Sandy Fu, Sell. @Omar Khan's got the rental picture nailed and it's bleak. But I don't think you have to 1031 which makes is a sweeter deal. That 100K ish of profit will be tax free because it's your primary residence.

Take the tax free profit and run - no question.

Dave Pockets · Answer

Rent it out and if it doesn't work out in your favor, sell it.

Should I lease or sell my condo in Arcadia, CA?

Should I lease or sell my condo in Arcadia, CA?

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