Stay or Sell?

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halfnote19_IHB

halfnote19_IHB

New member
<p>I have been reading what you have been posting and find it all very interesting but troublesome.</p>

<p>My husband and I bought a condo 2 years ago, thinking that we would be priced out forever. We are planning on selling in 2 years, but according to what I have been reading that may be after a big drop. So I am trying to figure out should we sell now or stay and see what happens.</p>
 
Halfnote19.....thanks for letting us comment on your dilema. First I want to start by saying if I was in your shoes this is how I would approach the situation and I am a housing bear.





1) analyze what comps in your community are selling for right now and how many days they have been on the market. Once you have done this you should be able to get a feeling for what your community's market price is. Try Zillow for some of this info.





2) once you think you have a price that the market would bear you need to take a hard look at your current loan. If you have equity that is great, it means you have some wiggle room. If you don't have equity you really need to make sure that your belief that this market is heading south is on the fundamentals not what everyone is saying in here, I only say this b/c you now have less wiggle room and the chance of selling for a loss is much more likely.


****Remember that even if you loose a few thousand dollars on a sell and if this market does take a 20% to 50% dive you are still should come out ahead.





3) the next thing I would do is start looking at rentals. You ultimately want to make sure that what you are renting for, your increased savings power, and paying down on bad debts is better than keeping the condo.


For instance, if you can rent for $2000.00 and your mortgage is $3800.00 then you are saving an additional $1800 / mth. This money can be reinvested or it should be used to pay down a loss on the condo if you have one.





4) after all this analysis if you believe selling is right then you should pull the trigger.





Again this is how I would approach the situation and I am not saying you should or should not sell. Just make sure you do your homework before you sell b/c from the sounds of your situation you are not a FB but someone who does not want to loose the equity you have earned up to this point.
 
Hello Halfnote 19,





Perhaps if you could provide us with some info, we can better advice you. For example, your purchase price, current market value, mortgage amount, monthly loan payment, etc.
 
<p>I'm bona-fide bear, but if you've only been in your place two years, it may not make sense to sell.</p>

<p>If you aren't going to need to move when the market is down and you can truly afford your payment, it may not make sense to try to time the market. However, if you know you'll have a few kids or plan to move out of the area, you might be better off getting out now as opposed to 18 months from now.</p>

<p>-SCHB</p>
 
<p>I bought for $307 my monthly payment is $1743 and balance is about $297. I am not a FB, my loan is a 30yr fixed and we can completely afford it, I just don't want to loose too much. We don't want to be here for too long, its only a 1 bd room and would like a bigger place.</p>

<p>Current units for sale:</p>



$280,000 DOM 43

$284,500 DOM 48

$299,900 DOM 63

$299,900 DOM 70

$300,000 DOM 1

$300,000 DOM 62

$309,900 DOM 50

>

<p>Units sold:</p>



$289,900 DOM 141 2/26/07

$289,900 DOM 34 1/31/07

$300,000 DOM 193 1/19/07

$275,000 DOM 105 12/27/06

$281,000 DOM 45 11/28/06

$279,000 DOM 13 11/29/06

>
 
does $1700/mo include everything (taxes, mello roos, etc)?





if so, it certainly seems very comparable to renting.
 
Wowser!!!! I must admit that staying put really looks like the best option. You can always keep saving and pay down as much of the principal as possible then convert it over to a rental a few yrs down the road.
 
halfnote19,





Could you afford to buy out your loan if you decided to sell? If not, you appear to be trapped already.





If you have read my writings, you know I am a housing bear. My advice would be to get out while you can with as little loss as you can, particularly if you don't want to be trapped in that condo for the next several years.





I have a post coming out next week about a situation very similar to yours...
 
<p>I can afford to pay the difference from sale price to mortgage balance but I have heard about short sales. I have heard that the bank eats the differance from the sale price and balance, please correct me if I am wrong. How do they work and who is "eligible"?</p>
 
halfnote19,





Unless you were planning on forking over your hoped-for appreciation windfall to the bank when you purchased two years ago, you should not look to the bank or elsewhere to find a bagholder. If you have the means, hold on to your "bag" since you alone are responsible for it and in two to 10 years you will find something valuable in it.
 
Halfnote....I suggest you read this. It doesnt sound like you are financial burden so I don't think short selling is an option. Anyways, good luck.





http://www.totalrealestatesolutions.com/articles/disp.cfm?aid=220&typeid=1
 
Hello Halfnote 19,





Do you know the going rate for rentals on your unit?





If you don't intend to stay there for long, but end up keeping the property, you'd most likely have to turn it into a rental to offset your mortgage expense. Might want to look at the cost of ownership vs. rental income to see what the difference is.
 
<p>mino2126 - thanks for the short sale info. I only recently heard about it from co-workers and wanted more clarification on how it worked. What I had heard seems to be totally different.</p>

<p>The rental prices for my units is approx $1200 a month. I have figured that owning the property costs me an extra $5k a year or more depending on appreciation (or lack there of). My big fear is being stuck selling the unit at a huge loss. I can afford to pay the negative equity, but of course would like to keep that to a minimum.</p>
 
Halfnote19....glad I could help. If you really want out I would seriously look at renting first vs selling. Their is no way to pay for the negitive equity when your mortgage is cheaper than what you are going to find for most 1 / 2 bedroom apartments in Irvine. I suggest talking to an accountant and seeing if their are any advantages of setting up an LLC or S-Corp, deeding the house to the LLC or S-Corp, and renting the property out. Atleast this way if you do sell while it is a rental property you can carry the loss and reduce your tax base....but their are alot of things that you have to do for the LLC or S-Corp.
 
I believe Missouri LLC's do not have any yearly charges but you'd have to ask an accountant whether you'd still have to pay the $800/year to California.
 
what kind of sq footage? in what village?





sorry not to pry but you should be able to get MUCH more than 1200/mo for 1 bedroom but maybe depending on how old the unit is, the village and the amenities nearby.





look at rental prices in woodbury. 615 sq ft 1/1 runs at least 1500/mo. for a private condo unit, you should find people willing to pay more to have fewer neighbors and possibly connected garage.





http://www.rental-living.com/Communities/Woodbury-Court/Prices-And-Floorplans/
 
I don't know the unit/area in question, but assuming the monthly rental income is $1200 and their cost of ownership is $2200/month, it'd be many years before rent catches up to break-even point. They're probably looking at 10+ years of negative cash-flow on the unit.





If they sell it for $290k today, they'd have to pay out about $25,000, not counting loss of original down payment amount.





This is a tough call. I'm leaning toward keeping it and live there yourself, because if you sell you'd lose $$ and have to pay $1500+/month rent to Irvine Company anyway. If you keep it, your monthly cost of ownership is $2200, but you get some tax deductions (mortgage interest, property tax). If you can handle living in a small condo for some years, this might be the best option for you. But if you have to get a bigger place soon (kids?), then you might be better off selling it and just eat the loss.
 
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