Should I sell my condo?

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Topic Author
blue_red
Posts: 14
Joined: Wed Sep 02, 2020 2:13 pm

Should I sell my condo?

Post by blue_red »

Hello Bogleheads,

I need a bit of advice. I own a condo that I am currently renting out. The rental I get is $2800. The costs are $2750 broken down as follows
  • Principal and Interest = $1850 [30 year fixed at 3.5%]
  • Taxes = $600
  • HOA = $300


Renting the condo shouldn't be a problem as it is in a good school district and desirable area. Mortgage left on the condo is $375K (25 years left on the mortgage), similar condos in the community are selling for $750K. If I sell I will net around $300K after all fees (it was a primary home until recently so we will not need to pay taxes per the 2-out-5 rule]. If I sell I will invest all the $300K in VTI.

Would you advice I keep renting the condo as it breaks even with rent, or sell and invest the proceeds in VTI? Thanks for your time and advice
student
Posts: 10761
Joined: Fri Apr 03, 2015 6:58 am

Re: Should I sell my condo?

Post by student »

I would sell. Too much hassle for being a landlord.
123
Posts: 10415
Joined: Fri Oct 12, 2012 3:55 pm

Re: Should I sell my condo?

Post by 123 »

I would sell and collect my tax free capital gains!
The closest helping hand is at the end of your own arm.
Topic Author
blue_red
Posts: 14
Joined: Wed Sep 02, 2020 2:13 pm

Re: Should I sell my condo?

Post by blue_red »

student wrote: Tue May 18, 2021 6:23 pm I would sell. Too much hassle for being a landlord.
thanks for your advice. appreciate it.
Topic Author
blue_red
Posts: 14
Joined: Wed Sep 02, 2020 2:13 pm

Re: Should I sell my condo?

Post by blue_red »

123 wrote: Tue May 18, 2021 8:42 pm I would sell and collect my tax free capital gains!
thanks for your advice. appreciate it.
rascott
Posts: 2957
Joined: Wed Apr 15, 2015 10:53 am

Re: Should I sell my condo?

Post by rascott »

Sell.... no question about it..

Once you factor in occasional repairs a month vacancy here or there this is a money loser... and you are only betting on appreciation for any kind of return on your $300k of equity. Hard pass on that deal.
Last edited by rascott on Tue May 18, 2021 9:28 pm, edited 1 time in total.
dachshunddad
Posts: 229
Joined: Mon Sep 03, 2018 8:22 pm

Re: Should I sell my condo?

Post by dachshunddad »

I’m in a similar situation. I’m listing mine for sale. The return on equity on mine (and yours) isn’t very good. Taxes and HOA eat into profit. Also, Tax free gain is hard to pass up. I’ll be putting it in total US/INTL index funds after the sale.
Bobby206
Posts: 621
Joined: Fri Oct 05, 2018 4:01 pm

Re: Should I sell my condo?

Post by Bobby206 »

I am a landlord and I like owning property but I would sell this FOR SURE.

Your cash flow is pennies and your risk is big. When you factor in deferred maintenance, vacancy allowance, market risk, capex, bad tenants ruining the place, etc....

SELL while the market is hot!
dachshunddad
Posts: 229
Joined: Mon Sep 03, 2018 8:22 pm

Re: Should I sell my condo?

Post by dachshunddad »

Bobby206 wrote: Tue May 18, 2021 9:31 pm

SELL while the market is hot!
This is the other good point. The values have popped 20%+ this year.
tibbitts
Posts: 23716
Joined: Tue Feb 27, 2007 5:50 pm

Re: Should I sell my condo?

Post by tibbitts »

blue_red wrote: Tue May 18, 2021 6:17 pm Hello Bogleheads,

I need a bit of advice. I own a condo that I am currently renting out.
I only read those two sentences and that was enough to answer that you should sell.
Valuethinker
Posts: 49021
Joined: Fri May 11, 2007 11:07 am

Re: Should I sell my condo?

Post by Valuethinker »

dachshunddad wrote: Tue May 18, 2021 9:49 pm
Bobby206 wrote: Tue May 18, 2021 9:31 pm

SELL while the market is hot!
This is the other good point. The values have popped 20%+ this year.
And the tax point - saving.
Valuethinker
Posts: 49021
Joined: Fri May 11, 2007 11:07 am

Re: Should I sell my condo?

Post by Valuethinker »

blue_red wrote: Tue May 18, 2021 6:17 pm Hello Bogleheads,

I need a bit of advice. I own a condo that I am currently renting out. The rental I get is $2800. The costs are $2750 broken down as follows
  • Principal and Interest = $1850 [30 year fixed at 3.5%]
  • Taxes = $600
  • HOA = $300


Renting the condo shouldn't be a problem as it is in a good school district and desirable area. Mortgage left on the condo is $375K (25 years left on the mortgage), similar condos in the community are selling for $750K. If I sell I will net around $300K after all fees (it was a primary home until recently so we will not need to pay taxes per the 2-out-5 rule]. If I sell I will invest all the $300K in VTI.

Would you advice I keep renting the condo as it breaks even with rent, or sell and invest the proceeds in VTI? Thanks for your time and advice
Saving the tax tips it over. If there was any doubt before:

- prices are shooting up, a rate of growth which is not sustainable
- you save the tax
- 300k to redeploy into your investment portfolio
- current investment is cash flow negative

You might be selling a year early. But it's easier to sell a year early than a year late.
carolinaman
Posts: 5463
Joined: Wed Dec 28, 2011 8:56 am
Location: North Carolina

Re: Should I sell my condo?

Post by carolinaman »

I would sell. You are in a roughly breakeven best case for renting the condo. There are too many headaches with rentals to make this worthwhile. Also, this is a seller's market. A great time to sell.
Topic Author
blue_red
Posts: 14
Joined: Wed Sep 02, 2020 2:13 pm

Re: Should I sell my condo?

Post by blue_red »

carolinaman wrote: Wed May 19, 2021 8:17 am I would sell. You are in a roughly breakeven best case for renting the condo. There are too many headaches with rentals to make this worthwhile. Also, this is a seller's market. A great time to sell.
thank you everyone for your advice. I have decided to sell the condo within the next 12 months.
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JoeRetire
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Re: Should I sell my condo?

Post by JoeRetire »

blue_red wrote: Tue May 18, 2021 6:17 pm I own a condo that I am currently renting out. The rental I get is $2800. The costs are $2750
Sell. You aren't making nearly enough profit to justify tying up your money.

Assuming the condo market is hot in your locale right now, sell it now.
This isn't just my wallet. It's an organizer, a memory and an old friend.
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Noobvestor
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Re: Should I sell my condo?

Post by Noobvestor »

I know it's market timing, but if I had extra real estate right now in this crazy RE market, I would absolutely sell it versus renting it.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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