All Forum Posts by: Jason B.

1st, did the dp assistance come with any strings, like a minimum time you have to own before you can sell w/o having to pay it back?
2nd, if you bought (before the burst) in 2005 for $150k (and still owe $140k), unless you're in an unusual area that has not been hammered by the economy, you're probably upside down and can't sell for what you owe.
3rd, with no skin in the game, as you say, you soon will, with your unpaid time to maintain and manage, and the negative cash flow.

Do you (and I know this is reaching), have any significant other income that you can shelter with the tax loss on this property? Little consolation, but I think you're stuck.

Ralph, thanks for responding.

To my knowledge there is no applicable penalty for using the downpayment assistance since (to your correct assumption in point #2) I would not be selling this for a profit ... most likely.

I have been getting the tax sheltering advantages of owning the property.

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Originally posted by Steve Smithy:

Well that's great that you have no skin in the game, but consider these points:
+ what happens if you can't rent it for a few months? Are you willing to pay the mortgage on this place from your paycheck just to own it?
+ Is this your only property? If so I presume its in your name and not a LLC/S-Corp, I assume you cant' justify/afford a $1M liability umbrella policy with the proceeds from this if you get sued.
+ Are you managing it? What happens if you need to hire a property manager?
+ is there anything coming to the area that would drive the value up in the next 5 years? If not you're not likely to make money off this property!

If it were me, I'd try splitting the duplex into 2 units (if thats possible) and do a light rehab and sell it for a small profit. This would take work from you though.

First of all thanks for taking the time to respond.

If I can't rent it then I pay for it. Not good but it is what it is. I was willing to do so under the previous assumptions that it was a good invesment and pretty much pays for itself (which I now realize won't be true at some point) .

I have one other duplex in the same area. I paid much less for that one. Both are currently in my name but I'm looking into starting an LLC for some protection. I do not have an umbrella policy but would consider it. I am managing both properties myself. There is nothing in the near future that would suggest a significant increase in property values any time soon. I'd definitely be hoping to break even selling this - that's best case scenario. Maybe I'm not using the right terminology when I said duplex. This is one building that contains an upstairs unit and a downstairs unit.

So I'm thinking that your opinion is this is a pretty terrible invesment ... damn. Why didn't I find this information 5 years ago.

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Hi everyone. My name is Jason, this is my 1st post, I just found the website a couple months ago.

I thought this would be a good group to ask for advice on one of my properties. Here's the situation:

I own a duplex that was bought in 2005 for around $150k. I owe around $140k currently. Mortgage payment is $1220/month and breaks down like this --> P&I = 808; Insurance = 62; MI = 58; RE Tax = 292; The units are nice and the rental area is a middle class - lower middle class area. The market price for each unit is around $650/month and I have no problem getting that.

All of the properties in this community were built from 1910ish - 1935ish so they are in some ways bulletproof and in some ways awful for maintenance. For instance, all doors are solid wood, but you can't always go to Lowes or Home Depot for replacement parts.

Anyways, duplexes in this area sell in a wide range because of the foreclosures. The range is anywhere from $50k - $175k.

When I bought this I held these beliefs 1) real estate never goes down in value 2) real estate is always a good invesment 3) if the rent was higher than the mortgage (P&I + RE taxes + Insurance) then you had an income producing property. Thanks to experience and the info on this and other websites I've been shown the light.

BTW - I am a buy and hold/rent guy.

So my fear now is that over time the operating expenses are going to eat me alive. Evaluating this deal against something like the 50% rule is ugly. It doesn't even come close.

So why am I even asking about this? I should sell if possible right? Well the catch is I have nothing invested in this property. I put zero down. It wasn't a 100% financing deal. There was a downpayment assistance program that paid the downpayment. And the seller paid all closing costs. I invested exactly $0 to aquire this property.

The roof is in fine condition. It should last me another 5 maybe 10+ years but I will need to replace it if I hold this property for 30+ years. It is painted wood siding so adding vinyl siding at some point might happen and be another major expense. So far over the past 4+ years expenses have been pretty low.

I guess in short I have a property whose monthly rent covers P&I+RE taxes+Insurance and provides no cash flow. I have invested almost nothing into the property other than covering minor expenses.

How good/bad of a deal do I have? Any thoughts/advice would be welcome.

Jason

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All Forum Posts by: Jason B.

Jason B. has started 1 posts and replied 3 times.

Post: Sell duplex or hold on to it

Post: Sell duplex or hold on to it

Post: Sell duplex or hold on to it