[quote=Panderso]Thanks all for your thoughts. This is exactly why I like posting on the internet — folks have no qualms about telling it like it is and exploring worst case scenarios, which is important to hear.
Flu, I totally get what you are saying and luckily we’ve considered all those factors. To clarify, I don’t expect 100 percent occupancy, I just said that to give some frame of reference to the cash flow numbers. I expect negative cash flow the first few years. I’m not thrilled about becoming a landlord and that’s weighed on our decision to keep the condo. The thing is, where would we invest that capital if we sold? We ran the numbers and, assuming 2 percent annual appreciation on the condo and averaged cash flow of only $100 a month, we’re stillwont way better off compared to having it in the stock market at a 5 percent annual return.
I do like diversified investments though … If folks can suggest a better place to park the cash I’d love to hear it.[/quote]
I am not going to recommend where you should park your cash because what works for me might not work for others. And it’s always something I ask myself anyway.
Sometimes the best investment is no investment if it just doesn’t feel right imho.
I personally don’t think we will see 2% appreciation each year for the next few years unless the banks start to relax lending standards imho. But who knows.
If I were in your situation, I like dealing with rentals so I would probably keep the condo as a rental because for me, all else being equal, I get more satisfaction with money earned from a tangible asset than on paper so I wouldn’t mind the pita factor. But I am weird.
If you are going to be starting a family, there’s probably things you’ll want to do there, and plus you’ll also want some emergency funds in cash there’s ever a job loss in the future(knock on wood). You probably have already thought about it so I won’t go there that’s your business.
It is probably ok if you have to wait for the right investment to come along too. So you just need to figure out if you want to be a landlord or not.
One thing I’ll bring up too is about passive losses on real estate. You might already know, but if you have a rental loss , you may or may not be able to deduct the complete amount. If your household modified agi is greater than $100k ( which it probably is if your husband is a techie) , how much you can write off of your rental losses against income you have elsewhere will get limited, with the write-off completely gone if your modified agi is $150k or higher I believe. The exception would be if one of you guys are a “real estate professional” as defined by the IRS. If you can’t write-off your losses, it gets carried over to the next year to offset any rental income gain that year and/or offsets your gain when you sell the property. I am not a tax guy or accountant, just an engineer…so talk to an accountant or read publication 925 I think from the IRS regarding passive activity.
