Condo – sell or rent out?

[unbiasedobserver]

CMRJoe, you said you thought 275K was a good deal for a 1BR condo. As I would like to try to understand what was going on in people’s minds a few years ago, please clarify:

Did you think 275K was a good deal because that’s what 1BR condos are worth, or did you think 275K was a good deal because you would be selling it for 400K in 2 years?

I sold a 1BR condo in the early 90’s for 29K. That plus some inflation is about what a 1BR condo is worth.

[blackbox]

Well, what did you expect, afterall CMRjoe called it the real estate game. I guess when you’ve never seen real estate prices go down, it all starts becoming a game……..
Well, game over, live and learn……..

275K for a 1 bedroom condo, that is what a commom/run in the mill single family house should cost in most San diego counties.
haha, amazing what some people will do when it starts becoming a game to them. Kiss your down payment goodbye, and thank you for playing!

[blackbox]

Well, what did you expect, afterall CMRjoe called it the real estate game. I guess when you’ve never seen real estate prices go down, it all starts becoming a game……..
Well, game over, live and learn……..

275K for a 1 bedroom condo, that is what a commom/run in the mill single family house should cost in most San diego counties.
haha, amazing what some people will do when it starts becoming a game to them. Kiss your down payment goodbye, and thank you for playing!

[blackbox]

Well, what did you expect, afterall CMRjoe called it the real estate game. I guess when you’ve never seen real estate prices go down, it all starts becoming a game……..
Well, game over, live and learn……..

275K for a 1 bedroom condo, that is what a commom/run in the mill single family house should cost in most San diego counties.
haha, amazing what some people will do when it starts becoming a game to them. Kiss your down payment goodbye, and thank you for playing!

[4plexowner]

I’m not following your rationale – I’m expecting the market to bottom in 2012 so holding to sell at that point doesn’t make sense (from my perspective) – your $70K loss today is likely to be as much as twice that in 2012

1bdrm and studio condos are just about worthless from an investment standpoint – a 2 brdrm mobile home is probably a better investment

it is possible that your condo will NEVER be worth what you paid for it – assuming that the market will ever get back to 2005 levels is a fools’ bet

[4plexowner]

I’m not following your rationale – I’m expecting the market to bottom in 2012 so holding to sell at that point doesn’t make sense (from my perspective) – your $70K loss today is likely to be as much as twice that in 2012

1bdrm and studio condos are just about worthless from an investment standpoint – a 2 brdrm mobile home is probably a better investment

it is possible that your condo will NEVER be worth what you paid for it – assuming that the market will ever get back to 2005 levels is a fools’ bet

[4plexowner]

I’m not following your rationale – I’m expecting the market to bottom in 2012 so holding to sell at that point doesn’t make sense (from my perspective) – your $70K loss today is likely to be as much as twice that in 2012

1bdrm and studio condos are just about worthless from an investment standpoint – a 2 brdrm mobile home is probably a better investment

it is possible that your condo will NEVER be worth what you paid for it – assuming that the market will ever get back to 2005 levels is a fools’ bet

[2008]

4plexowner – look I’m screwed any way you look at it, I’m trying to figure out how to minimize the pain, so I’m looking at taking the obvious loss today, versus writing off the loss from rental over the next decade as FormerSD suggested. Or the next 5 years. Not buying into any rationale at this point, just trying to understand the best route to go. I do not expect my condo to go back to 2005 values.

What do you suggest I do?

[2008]

4plexowner – look I’m screwed any way you look at it, I’m trying to figure out how to minimize the pain, so I’m looking at taking the obvious loss today, versus writing off the loss from rental over the next decade as FormerSD suggested. Or the next 5 years. Not buying into any rationale at this point, just trying to understand the best route to go. I do not expect my condo to go back to 2005 values.

What do you suggest I do?

[2008]

4plexowner – look I’m screwed any way you look at it, I’m trying to figure out how to minimize the pain, so I’m looking at taking the obvious loss today, versus writing off the loss from rental over the next decade as FormerSD suggested. Or the next 5 years. Not buying into any rationale at this point, just trying to understand the best route to go. I do not expect my condo to go back to 2005 values.

What do you suggest I do?

[(former)FormerSanDiegan]

2008 – After 5 years your loss on monthly carrying costs is about 42K. But you still have the 70K loss as well as any additional loss/gain in value over the next 5 years. (I’m guessing another 15% loss or about another 30K).

So, you can either take a guaranteed 70K hit now, or gamble and take a 70K +/- any additional depreciation, plus another 42K loss (plus about 28 K reduction in taxes) over 5 years.

I think this is a bad 5-year bet. If you are likely to sell in 5 years, then you ought to sell now. If you plan to hold for 10 years or more, however, it would probably work out OK.

Also, if you have sufficient assets (e.g. 70K) to sell now and pay the loss, then you probably could also handle the risk of carrying this as a rental.

[(former)FormerSanDiegan]

2008 – After 5 years your loss on monthly carrying costs is about 42K. But you still have the 70K loss as well as any additional loss/gain in value over the next 5 years. (I’m guessing another 15% loss or about another 30K).

So, you can either take a guaranteed 70K hit now, or gamble and take a 70K +/- any additional depreciation, plus another 42K loss (plus about 28 K reduction in taxes) over 5 years.

I think this is a bad 5-year bet. If you are likely to sell in 5 years, then you ought to sell now. If you plan to hold for 10 years or more, however, it would probably work out OK.

Also, if you have sufficient assets (e.g. 70K) to sell now and pay the loss, then you probably could also handle the risk of carrying this as a rental.

[(former)FormerSanDiegan]

2008 – After 5 years your loss on monthly carrying costs is about 42K. But you still have the 70K loss as well as any additional loss/gain in value over the next 5 years. (I’m guessing another 15% loss or about another 30K).

So, you can either take a guaranteed 70K hit now, or gamble and take a 70K +/- any additional depreciation, plus another 42K loss (plus about 28 K reduction in taxes) over 5 years.

I think this is a bad 5-year bet. If you are likely to sell in 5 years, then you ought to sell now. If you plan to hold for 10 years or more, however, it would probably work out OK.

Also, if you have sufficient assets (e.g. 70K) to sell now and pay the loss, then you probably could also handle the risk of carrying this as a rental.

[(former)FormerSanDiegan]

I sold a 1BR condo in the early 90’s for 29K.

OOOps. So, we should take your advice ?

I would pay 125-150K for a unit that rents for $1000/ month.
Unless we had 10% inflation the last 16 years I don’t think 29K plus inflation from the early 1990’s gets you there.

[(former)FormerSanDiegan]

I sold a 1BR condo in the early 90’s for 29K.

OOOps. So, we should take your advice ?

I would pay 125-150K for a unit that rents for $1000/ month.
Unless we had 10% inflation the last 16 years I don’t think 29K plus inflation from the early 1990’s gets you there.

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