Should I sell my Chicago condo?
I own a condo that has a tennant and the rent covers HOA fees and mortgage plus around 100 a month. I purchased the condo for 110k and could sell it for 200k. I have around 50k financed with 20 years left. Mortgage is 800 a month and includes taxes. HOA is around 650. Rent brings in 1500. Is there a better use of my money?
Where do you live now? Can you afford the mortgage if there is no tenant (if you’re in between tenants etc)?
I live in the bay area. Paying the mortgage without a tennant wouldn't be an issue. The condo is in a good location with a great view, so finding new tenants shouldn't be too painful.
I think you should keep it then. Seems like this could be good passive income.
Three things to think about: 1. Current annual net effective return on $200k is $1,200 doesn’t even cover inflation. 2. What is the rate of appreciation and do you have any confidence that it will continue going up? 3. I hate HOA fees. You are always one damaged roof or one broken elevator away from additional monthly assessments that can be in the thousands. I would free up my capital just because of HOA.
1 Nice 2 I would not assume appreciation beyond inflation, but it's near Wriglyville with a good amount of new development. My condo is from early 70's. 3 It's a large building (400 units) with good reserve, the fees have gone up a bit in the last decade, but there has never been a special assessment. The HOA does eat a large chunk of the rent and that is my main thought in exploring other investments.
Its not only making you $1200 a year. You are also building up equity on the house (so thats extra income) Look at the amortization table of your mortgage. You will see how much you are paying on interest vs principal. Also, keep in mind you only really have 150k on this property. So, try to caculate your ROI using: (1200+ total principal for the year)/150000*100 I would say if this number is lower than 6, then you can probably find a better investment.
Never sell real estate. Keep raising the rent, increase the cash flow.
Yep raise rent every year.
Luckily it is not rent controlled.
If the goal is to maximize your returns then there’s usually an optimal time to sell real estate. Forever holdings more of a mantra versus rational investment strategy
How would you determine the optimal time to sell?
After a big bust of appreciation you should concider selling if max returns are the goal and you have other investment opportunities
One of my biggest regrets is selling my River North condo. Keep it.
Consider refinancing if it makes sense. Keep it, buy more, live off the semi passive income