Should I sell or rent my condo

Question

My condo in Michigan is 20 years old, in great shape and paid for. It would sell for $225+  The HOA is $162  with a great association. If I don’t Homestead, taxes are $3500 per year.  I am thinking of leaving it furnished. I bought a small condo in Florida, also paid for but now I could really use the income.  I was widowed  fairly young and I am living on a small Social Security check   The condo should rent for $1700-$2000 per month.   If I cleared $1000 a month I would be happy. Any thoughts?

Rob Joon · Answer

Keep the condo. Find out what other condos are renting for in the complex. Then marke find a good property manager. This will give you peace of mind and steady income.

Joy V. · Answer

Wow! I will research both of those but I have to say I can’t afford to lose the money, and both sound like they are a risk. I know brokers are salesmen and I happen to be an agent who has sold many fix annuities.   I’m not licensed to sell securities. Every time I’ve spoken with a financial advisor they want to sell me the highest commissioned product. As an agent I have the ability to find out from the insurance companies.   I will look for a good broker.

Thomas S. · Answer

200K invested in a moderate risk income fund should produce on average a 10% return. That is $1600 per month. Putting 200K into a REIT is far less work than actually owning real estate for those not interested in managing a business.

You will be rethinking your investment when faced with your first eviction and 10K in damage if you do not view your condo as a business..

Get yourself a financial advisor to coach your investments.

Joy V. · Answer

Thanks Marcus. I agree that from a strictly financial point of view your strategy would be more advantageous, however, I am not looking to make a business of this.   I just need a little extra cash and thought turning my home into that stream of income would suit me better than having a lump sum that I don’t know what to do with.  Where can I get a return like that with $200K?

Marcus Auerbach · Answer

@Joy Vanneste the general consesus in the investor community is that condos don't make very good RE investments for two main reasons: lack of control of your ability to rent and HOA fees. Investor's who had success with condo's are often at a very low price points, say below 50k or below 30k.

From a strictly financial point of view you are probably better off to sell it and invest the money in a better vehicle. If your net proceeds are 200k after fees, you could buy 800k worth of median priced single family homes - so, probably 3 or 4. Not only will your leveraged return be greater than unleveraged, but you will also have more incoem stability with 3 or 4 units vs just one condo.

Of course, this will be a lot more work than just renting out the condo.

Should I sell or rent my condo

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