All of My Financials - Rent Out or Sell it?

3 Replies

I want to give the best picture of my financials and everything involved in among big a decision to SELL or RENT OUT my Philadelphia Suburb one bedroom condo.

First the financials:

-Purchase Price: $119,000

-Money Owed: $90,500

-Mortgage/Taxes/Ins: $735/m

-HOA: $195/m

-HOA Rental Cost: $50/m

-My place has hardwood/upgrades, neighboring unit renting for $1,100-1,200 does not.

Downsides: first floor...footsteps, running water, love making/squeaking heard from upstairs. Also house centipedes which I'm working on extinguishing. A/C unit and furnace are 25 Years Old, needs a patio door and some paint/touch ups. (The noise is pretty bad from upstairs honestly but partially due to the person being very large too...a 120 lb woman moving in there I bet it would be non-existent. I probably wouldn't have bought this if I was aware but lesson learned as I was just 25 years old getting my first place a few years back). If I were to sell then probably I should get stainless steel appliances and countertops, not sure

Upsides: Strong development here in Montgomery County PA, Einstein Hospital Build nearby somewhat recently and units surrounding have long term renters even for or bedrooms. This is a desirable community, rents and prices here are higher than average. HOA seems high for no benefits in terms of a gym, pool, etc. as it's mainly for the grounds.

I'd like to rent but with upkeep and vacancy I don't see it cash flowing. Is it worth renting out a property that doesn't cash flow to just pay down the mortgage?

So 1,150 - 980 = $170 then $142 to loan principal on mortgage is $212/m eek.

If I sell I probably won't get $119,000 plus I'll loose the $7,500 closing and $6,000ish seller costs. The other thing is that to sell I should do some minor upgrades if selling, though not sure how much would be worth it.

Can anyone talk me into selling this and losing the closing and selling costs of the property!?  Haha.  I think it's obviously not going to cash flow.  Any advice is greatly appreciated! Thanks!!

-Dan

I forgot to consider the tax benefits, not sure if the property write offs and taxes on investment income makes this more or less desirable.

i was in a similar situation back in 2010, except it was with the addition of being underwater on the place... so this was one of those places that i had purchased as a primary residence at the peak of the market, 2005 and by 2010 the value had dropped by maybe 40%. The upside was that I still believed in the area... this was the bay area in CA after all, so i thought if i could hang on to it long enough, prices will come back. We were set to move in 2010 and I didn't want to take the huge loss on it, even if that meant I wasn't cash flowing on the property. I rented it out and just covered mortgage and HOA... i don't think we even covered taxes at that time. fast forward 6 years, we have had the same tenant all 6 years, the place still doesn't cash flow, we're close to breaking even on it now over the course of 3 years of raising rent (but property taxes have sky rocketed!)... and given all those 'failures'... i don't regret hanging on to it b/c now the place has appreciated almost 150% and i can now sell it and make about 300K on it!

So in your situation - you mentioned that the market there seems strong... perhaps you do the math to see how much you lose per year renting it out and maybe you keep it until the market appreciates enough for a good sale - a sale that would cancel out any loss you might have from renting it out.  Course that's also only IF you have the reserves to be able to afford any additional expenses in the interim.  It's a gamble - and in our case, we weighed it against what we felt like were good odds and it worked out.  

Good luck

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