Sell my condo or keep it and rent?

Question

I’m trying to start in the Real Estate Investment and at the same time get a house that we like to live for a while. I found a good deal that my offer might be accepted and would live in that house as a primary for 3y at least while doing updates. I have a condo in Naples that I bought at the peak in 2022 with a 4.5% interest and it will end in 2041 since I paid towards principal. My bosses are my partners with around 35% now in the condo and they give me a 10k bonus yearly discounting in that debt and I might be paid off with them around 2034. My question is:

Scenario A: I get the house with a 7.5% mortgage and rent the condo with no cash flow at least for a while but tenants will be paying the costs and I open a LLC and in some point do a 1031.

Scenario B: My bosses offered me to get the house and land to me with 4% interest and we sell the condo. I might pay off the house in 6y maximum if go with that and could buy another small property as investment.

I feel like I’ll be losing with all the closing costs if I go with Scenario B, in the other hand I’d have a better interest and the possibility of buying something else not to mention flexibility of no HOA. Feels like Scenario B is the best but I really would love opinion from great minds, what would you do?

Hossein Sharifi · Answer

Run both on cash, not feelings about closing costs. For A: condo rent minus HOA, insurance, taxes, vacancy and reserves. If it's break-even or negative with HOA risk you don't control, "tenants covering costs" is fragile. For B: 4% is a gift, but put the boss financing in writing (default, job change, prepay, who owns title). Closing costs are a one-time hit; a bad HOA special assessment or a fuzzy partner note is ongoing. Compare them side by side: 5-year cash, liquidity, and what you'd buy next. If B frees up a clean next investment and kills the HOA risk, that's often the win, once the paperwork is real.

Divin Kanyama · Answer

@Priscila Batalha Sawamura This sounds like one of those decisions where the lower rate is attractive, but the structure matters just as much as the math. Scenario B could provide much more flexibility: a 4% rate, no HOA, a faster payoff, and the ability to build cash for a future investment rather than carrying a condo that may not produce cash flow.

That said, the biggest question may be the arrangement with the bosses. Before moving forward, it would be important to document the ownership, financing terms, annual bonus credits, what happens if the employment relationship changes, and how either side can exit. A favorable interest rate can lose some of its appeal if the agreement creates uncertainty or limits future options.

The closing costs alone should not drive the decision. It would help to compare the condo’s realistic rent, HOA fees, maintenance, vacancy, taxes, insurance, remaining partner balance, and expected appreciation against the savings and flexibility offered by Scenario B. Also, a future 1031 exchange generally applies to investment property, so the timing of converting the condo from a residence to a rental and the later sale should be reviewed carefully. Based on the facts shared, Scenario B sounds promising, but only after the financing and ownership agreement is put in writing and the condo’s true net numbers are clear. Since the tax and legal details can turn on how everything is structured, it would be worth having the final arrangement reviewed before committing.

Richard F. · Answer

Unless you are very well versed in HOA reserve funding plans and exactly how they are developed, and what they do and do not tell you, I would recommend selling it. You have no control of expenses for the longer term on the condo, but do have control of expenses for the SFH. I am happy to review your most recent annual budget and reserves funding plan and point out specifics if you wish.

Sell my condo or keep it and rent?

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