Today I had a new client meeting on whether to rent or sell her new 2/1/2 condo. What would you do? Bought property in 2008 for $600,000. Today's market condo is worth $525,000 to $550,000. Knowing this is a Buyer's market price is VERY important. Showing immediate value to potential buyers creates activity and possibly multiple offers. There are 24 active listings that compete with her property. Average sale per month is 2. There is 10-12 months of inventory on the market. So once again price is important if she wants to sell fast. However, her loss will be more if sold at the low price.
Original down payment was $120,000. She wants to recoup her initial down payment so she is thinking of renting. Rents for this type unit furnished is $2300- $2500. Her loss per month renting is $1465 per month. times that by 12 then 5 years if the market comes back then. She wants to sell the place later on for $640,000 to recoup her $120,000 down payment and cover her closing & real estate fees. Her loss both ways end up the same. Do you keep on hanging in take your loss, realize you made a financial mistake in buying this property and move on or do you sell get out from under it, no more headache and heaviness in your lifeand get the cash now to begin to save for your future now verses later?
Love to have your answer. Of course I always recommend talking to your CPA or Financial Advisor for tax consequences. In this case, she does not have either. I recommended she gets one.
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The rents are also continuing to fall. With maintenance costs and the possibility of bad renters, I say sell at a loss.
ReplyDeleteSell now also because we haven't seen the bottom of the market yet. There is no garuntee that the housing market will recover to their previous bloated highs in five or even ten years. Sell NOW.
If she can afford the $1400 loss every month, she can write it off on her taxes (for the interest, etc.). The market is down now but it will always go up if you can wait.
ReplyDeleteThe problem is that I was suggesting to get her to go to her CPA or Financial advisor to find out which is best for her financially. If I don't know the whole picture then it is harder to suggest what she should do. Yes, for some the monthly loss could be very good to them, but for some the immediate loss is better. Either way in this meeting her thoughts were that if I wait I would recoup my money. In actuality she is not. She is losing the same amount. So sell now and have the same loss or sell later with the same loss but she will continue to have the headaches and pain she has paying the mortgage each month.
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