As a newbie in real estate, I wanted to get some of your opinion on the situation I'm in. I bought a condo in NJ for 220k around 4 years ago and have been living in it. Unfortunately my wife's job started requiring her to come into the office in PA so we plan on relocating there. We do have a decent amount of equity on the home about 150k (current estimated value is ~315k) but since the mortgage is 15 years (which I thought was smart & would save me interest over time...) if I were to charge market rent I would break even or possibly lose a little and get no cash flow. I do know there's tax benefits and tenants paying the mortgage off for you. However the HOA is very high ~$500 and it scares me to think about possible vacancy & the whole process of renting a home out. Any opinion / advice to help me make a decision would be much appreciated, thank you!
Real Estate Investor · Unadilla NY · Member since 2017 · 418 posts · 297 votes
2y
It sounds like you already decided for yourself: sell it and sleep at night.
The other alternative is to refinance to a longer term so it will cash flow, though by how much with these high interest rates is tbd. Throw in your balance into a mortgage calculator and see what it looks like amortized over 30 years at say 7.5 percent.
Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
2y
Hi Sean,
If you think it's a property you wouldn't want to keep in the long run, it's a good idea to move onto something else. You also have the option of refinancing rate/terms with your current lender and change it to more favorable terms. Alternatively, you could do a cash-out refinance into a 30 year fixed, if the numbers make sense.
As a newbie in real estate, I wanted to get some of your opinion on the situation I'm in. I bought a condo in NJ for 220k around 4 years ago and have been living in it. Unfortunately my wife's job started requiring her to come into the office in PA so we plan on relocating there. We do have a decent amount of equity on the home about 150k (current estimated value is ~315k) but since the mortgage is 15 years (which I thought was smart & would save me interest over time...) if I were to charge market rent I would break even or possibly lose a little and get no cash flow. I do know there's tax benefits and tenants paying the mortgage off for you. However the HOA is very high ~$500 and it scares me to think about possible vacancy & the whole process of renting a home out. Any opinion / advice to help me make a decision would be much appreciated, thank you!
It depends on the appreciation. If it appreciates more in PA than buying more SFs in PA is making sense more than keeping it as rent.
Real Estate Investor · Unadilla NY · Member since 2017 · 418 posts · 297 votes
2y
It sounds like you already decided for yourself: sell it and sleep at night.
The other alternative is to refinance to a longer term so it will cash flow, though by how much with these high interest rates is tbd. Throw in your balance into a mortgage calculator and see what it looks like amortized over 30 years at say 7.5 percent.
Hey Carlos, that makes total sense. I'm leaning towards selling it as the area doesn't appreciate very much yearly and I can buy more real estate in cheaper areas with the sale proceeds. Thanks a bunch for that!
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
2y
@Sean Ahn, I am not a financial market expert, but all things being equal, condos do not appreciate as well as SFHs or other assets. Moreover, there's a good chance HOA dues increase each year.
You've got a good chunk of equity parked in the deal. So, the question remains: if you decide to sell, what asset will you acquire with the proceeds? As others have noted, refinancing to a 30-year fixed could help you lower your monthly payment and achieve cash flow. $150k is a good chunk of money. Speak with a financial expert or someone of the like. Maybe, when you officially move, house hack a deal in PA... just a thought.
This is an excellent problem to have. Best of luck!
Hey Michael, as you mentioned HOA has been steadily going up every couple years so that is a factor to consider for sure. You are right on with househacking in PA as I'm looking at multifamily properties to move into as a way to offset the higher mortgage. Thanks for a great input!
Hey Carlos, that makes total sense. I'm leaning towards selling it as the area doesn't appreciate very much yearly and I can buy more real estate in cheaper areas with the sale proceeds. Thanks a bunch for that!
As a newbie in real estate, I wanted to get some of your opinion on the situation I'm in. I bought a condo in NJ for 220k around 4 years ago and have been living in it. Unfortunately my wife's job started requiring her to come into the office in PA so we plan on relocating there. We do have a decent amount of equity on the home about 150k (current estimated value is ~315k) but since the mortgage is 15 years (which I thought was smart & would save me interest over time...) if I were to charge market rent I would break even or possibly lose a little and get no cash flow. I do know there's tax benefits and tenants paying the mortgage off for you. However the HOA is very high ~$500 and it scares me to think about possible vacancy & the whole process of renting a home out. Any opinion / advice to help me make a decision would be much appreciated, thank you!
Agree with everyone who said SELL. No capital gain tax on the 115k, and appreciation is not amazing in your case. You can make more with the 115k invested elsewhere than being breakeven and wait for appreciation. 115k invested into real estate flips make you around 25-30% a year. Invested into MTR will make you around 8%-10% cashflow , while benefiting from appreciation, capital improvement, depreciation and amortization. Invested into commercial multifamily projects, you can double within 3 years. No reason to keep that lazy money in that property.
Shawnee Mission, KS · Member since 2016 · 716 posts · 313 votes
2y
Do your home work ,pull comps look like at rentals like yours what are they getting is there a glut or a short supply of rentals like yours in your area ?