Seeking Your Feedback: Plan "B" for Unsold Condo (AKA Quality of Life? Math)

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if you are making alot of money you should rent it out and have a negative cashflow. super tax write off. and you can write off a bunch of stuff off when you rent the unit out. get a good tax guy. only downside is that you have to fix crap.
 
Wow, lots of good feedback. I really appreciate everyone?s time.



So, to answer some of your questions (and comments):



Ipoplaya: Assuming I can sell it. Heh.



Girl In the OC: I?ve thought of that, but no leniency from me. And this will be backed by a legal contract and a fat lawyer. :)



Anonymous: I don?t care about status. Just more room for the kids and someplace to relax outside. The current place has little to no yard.



Hs_teacher: I agree with you that many people are too bearish, but only time will reveal that. They might be right. As for your other comment, no, we do not ?need? to sell it. We purchased well within our means a few years ago. And with our hard work, we both make more now than we did then, so I could weather a storm for many years if necessary. The question is, what is the best mid-term to long-term plan?



FairEconomist: There is a big difference between big house with big yard and small house with no yard. I?m looking for something in the middle. Nothing too crazy. But you bring up a good point about the equilibrium.



PadreBrian: A few people said that. :)



Jbatzmaru: Good point. This is why I come to this blog. I will admit that I?m no expert, but someone else suggested the same thing, so I need to start better understanding the impacts on my tax life. I wouldn?t say ?a lot? of money (to me, that means millions of dollars) but we can easily afford to weather the storm and still have a normal life. Unlike most of our friends, we don?t have a pair of Hummer H2?s and timeshares. So that helps.



Skek: Where can I find data on vacancies? I can?t speak for homes or condos, but a friend of mine who work in the apartment business said that from what she knows, many apartments complexes are more full than usual. It is good and bad. She said that while overall occupancy is up, so is the population density. Specifically, in the old days, many 2 bedroom apartment had 1 person (bedroom + office), but now it is almost always 2 people. Sometimes 3 people in the 2 bedroom units. Likewise for 3 bedroom places, with only the fire code serving as the maximum. She said the big impact is lack of parking and an overall ?crowded? feeling.



Fun!
 
If you give me a general idea of your townhome's location, I can look up the number of competing listings and days on the market, for MLS-listed lease properties. I would say that in general, the market for privately-held rental properties is soft, right now. Many homeowners are in the same situation as you, and they are turning to trying to lease their properties, instead of selling. I would highly recommend that you consider all the financial costs prior to making your decision. Your townhouse can be sold, it just depends on the price. Personally, I think many homeowners will be better off selling than leasing.
 
Code 777 - I wouldn't sell in this market if i don't have to... if you have sufficient money and savings and you and the wife is making over 150k. i negative cash flow isn't so bad. you can write off a lot of things. all repair and depreciation's and anything related to the rental can be written off.
 
Thanks again for all your replies and private messages. After reading the posts and speaking to some of you privately, the one topic that a lot of people brought to my attention is the tax impact (something I failed to fully appreciate)



Specifically, the fact that there will be a huge negative tax impact on me if I?m renting out my townhouse (and losing money) at the same time I?m paying rent on a single family home: My primary residence won't have a mortgage thereby reducing a huge tax advantage.



No less than 6 people contacted me and told me that my best option was to <u><strong>STAY PUT</strong></u> (even if the value of my home falls 20% to 30% more). Their logic was that what I have today is a "known risk" and that my current logic is backwards and that I?m going about this the wrong way.



Specifically, I should keep my townhouse long term. With long term being defined as ?sometime between when prices go up quite and forever? ? and that what I should do is ?suck it up? and live in my townhouse until I find a great deal on a single family home and buy it. And assuming that I buy a home at or near the bottom, the best (and only logical) thing I can do is rent out the townhouse. Then, when prices recover (in 5, 10, or whatever years) I can sell the townhouse or just keep it as a long term income property.



This seems to make sense to me for some reason. Especially considering that option #3 (sell the townhouse now for whatever [reasonable price] I can get it for it) looks to be even more problematic than just 24-hours ago. Yep, a new comp killer just got posted in my area at 15% below my last asking price. Looks to be bank owned, which doesn't help either. According to Redfin, it is now listed at just 75% of its last sale price in 2005. Eeek.
 
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