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?

Saadallah Kassir · Answer

Priscila, two things the replies haven’t covered.

1- Figure out whether the 4% offer depends on selling the condo. If you can get it either way, take it and judge the condo on its own. If it only comes with a sale, the real question is whether 3.5 points on the house loan is worth more than what the condo gives you.

2- treat the condo as if you were buying it today at its net sale value: what you’d keep after selling costs, the loan payoff, and your partners’ share. That’s the money tied up in it. If rent only covers costs, the return is principal paydown plus appreciation, minus assessment and insurance risk. Compare that with what the same money would earn elsewhere. For example, $80k of net equity at a 6% alternative means the condo has to bring in about $4.8k a year just to keep pace.

Put both scenarios in one five-year comparison with the same assumptions.

Jimmy Samaha · Answer

I'd put real numbers on "no cash flow" before choosing A. Florida condos have had big HOA and special assessment hikes since the new inspection/reserve laws, and insurance keeps climbing. A rental that breaks even today can be -$300/mo next year. Plus your partners own 35% of the condo, so you're carrying all the hassle for 65% of the upside.

Rough math on B: say selling costs ~7-8% total. That hurts once, but it's a one-time cost. The gap between 7.5% and 4% on, say, a $400k loan is roughly $14k/yr in interest. You make the closing costs back in a year or two, and you get rid of the HOA risk.

B looks better to me too. Just get the 4% deal from your bosses in writing as a recorded note and mortgage, with an attorney, so it's clean if anything changes at work.

Aaron Zucker · Answer

Priscila — one practical piece from the sales side in NY that applies in Naples too: get a real net number for the condo before you decide, not just an estimate. Ask a local agent for a seller's net sheet at two or three realistic prices, and check how financeable the building is for a buyer right now. Florida condos have gotten harder for buyers to finance and insure, and if your building has reserve or inspection issues coming, that affects both your sale price today and your costs as a landlord tomorrow — in opposite directions than most people expect.

Also worth pricing a third option between your A and B: your partners buy out your share of the condo, or you buy out theirs over time using that yearly credit. A clean internal buyout can avoid full open-market closing costs, keep the 4.5% loan in place if the structure allows it, and still free you to take the house at 4%.

Whatever you choose, decide the condo first. Carrying both payments while you figure it out is where this gets expensive.

Simon W. · Answer

I'd run the condo as a rental on paper before you keep it. Include HOA dues, a special assessment cushion, insurance, vacancy, and whatever you're still paying your partners. "Tenants cover the costs" only works if those costs are the full picture, and Naples HOAs can move on you.

The other piece is the ownership setup with your bosses. Before you talk 1031 or an LLC, get the percentage, the yearly credit, and the exit terms in writing. A future exchange or refinance gets messy if title and who is owed what are still handshake clarity.

Closing costs on a sale sting, but carrying a break-even condo plus a 7.5% primary can sting longer. Whichever path you pick, make the decision from a one-page cash view of both scenarios, not from the rate alone.

Amber Moore · Answer

I think I would ask myself if I would buy this condo as an investment if I wasn’t already in it. If the answer was no, I don’t think I would keep it just because I have a low interest rate or already sunk money into the purchase. Also, if it’s just paying for itself, would I want to be a landlord on that unit and what is it really doing for me? There are good reasons to hold onto a property, but selling could give you more flexibility for other opportunities.

I would look at both options, but I wouldn’t let the closing costs alone decide whether I sell.

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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