In 2018, I bought a house with $670k as the listed price and $820k as the final price. 20% downpayment. Now I don't like to live in that house. I moved away and rented it out. The mortgage and the rental are breaking even. I lose $10k each year on the property tax. It's a small old condo near Apple Park. I want to sell it to cut the loss(maybe invest in s&p500) and get away from something I don't like, but the estimated price now is $730k, 90k lower than the purchase price. Sincerely asking here, would you recommend to sell it or keep it from the financial perspective?
Sell it. We are really close to bubble burst, so cut your losses.
Raise the rent on it?
Why would someone take that place if it has higher rents?
Is it your only property? Did you buy it as place to live or investment?
Yes. Bought to live for 7 years but now no... it's too far from my work. Didn't know the housing market would drop like this.
If you can live in it (by having some work flexibility) that would be ideal. Since you bought it for living, I would suggest don’t panic sell. Housing in bay area will go up in the long run.
I do hope the bubble burst so I can buy a townhouse with a 50% discount 🏡. Please like if you’re in the same boat #BayAreaHomes
I know a few waiting for this since 2015
Folks if there is a bubble and it bursts its likely to increase real estate lol. Most recessions are not housing recessions ;)
You can deduct a lot of stuff from the property. You’ll also pay 6%+ selling it. The S&P 500 may not perform better. The way I see it, you only put in like $160k into the property and borrowed the rest. If the market improves leverage is on your side. I think making a couple percentage points is fine right now.
Sounds like you are just too overleveraged. Just let it ride if it’s mostly break even, one year of decline doesn’t tell you anything. Just be prepared to pay it off if you really do go steeply underwater.
You are probably not utilize all the tax deductions you get from this place. The biggest deductions you can get are the depreciations of the home and also the interest. Any HOA and maintenance of the home can also be deducted. Also you are gaining equities of the home for every payment. As long as there are demands for renting there, I suggest keeping the house and take as much tax advantage as you can. You should come out positive 😉
How is HOA deducible? I don’t believe it normally is
Apparently if you have a home office, you can.
You are also losing out as your downpayment is not invested
Yes! It's a regret I have overcame. If I put all my saved money into sp500 since 2016, I would be not far from FIRE as a single man by now.
On contrary you are building equity in the home as well. Sounds like 30k equity a year right now. That -10k in property taxes, amounts to 20k, which in total means you are getting back 12.5% on your original investment
I thought the price went up since last year. I am waiting for down market, it seems never going to happen.
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No if course not. Just raise the rent.
When layoffs kick off, demand supply graph will invert and OP will get heartburn
Thx for the suggestion! Will try but there is a limit from the market, and I think mine is not far from that, maybe ~200+- per month.