Would you sell or keep?

[surveyor]

risk risk risk

Given that you bought it in 1998 and assuming that you haven’t extracted most of the equity from it, that property probably has maybe $200k worth of equity in it. My recomendation would be to make that $200k or at least half of it work for you and create more money by investing it in properties outside the bubble areas of California, Florida, Nevada, and Arizona.

Assuming that you had $200k of equity, you could probably use $100k to buy a $500k 20 unit property in Missouri, Tennessee, or Utah which could cash flow about $500 per month.

If your wife is not working, you will be able to reduce practically all your income taxes to zero.

I was in the same boat as you a few years ago – I had a property, was unsure whether or not to sell it. I decided to keep the property and make it work for me.

Caveats: this process is very risky and will require a lot of personal education in order to do well. The time for success is long.

Still, if you use time and real estate properly, that $100k could become $2.8 million in 15 years (25% return, which is what I’ve been getting).

Good luck.

[surveyor]

risk risk risk

Given that you bought it in 1998 and assuming that you haven’t extracted most of the equity from it, that property probably has maybe $200k worth of equity in it. My recomendation would be to make that $200k or at least half of it work for you and create more money by investing it in properties outside the bubble areas of California, Florida, Nevada, and Arizona.

Assuming that you had $200k of equity, you could probably use $100k to buy a $500k 20 unit property in Missouri, Tennessee, or Utah which could cash flow about $500 per month.

If your wife is not working, you will be able to reduce practically all your income taxes to zero.

I was in the same boat as you a few years ago – I had a property, was unsure whether or not to sell it. I decided to keep the property and make it work for me.

Caveats: this process is very risky and will require a lot of personal education in order to do well. The time for success is long.

Still, if you use time and real estate properly, that $100k could become $2.8 million in 15 years (25% return, which is what I’ve been getting).

Good luck.

[4plexowner]

or, because of the ‘risk risk risk’ surveyor mentions you could end up without a pot to piss in because you tried to play the leverage game at the absolute worst time in history

[4plexowner]

or, because of the ‘risk risk risk’ surveyor mentions you could end up without a pot to piss in because you tried to play the leverage game at the absolute worst time in history

[SD Realtor]

I would keep it as well. I have a couple of listings in Oceanside and it is a grinder market up there. I am skeptical about the 475k-500k estimate for the sale of a 3/2 even if it is quite fixed up. If you are even breaking even on the cash flow then you are doing okay. My advice would be to keep it, save as much cash as you can so that when you come back you can use what you save for a dp on another property.

Thank you for serving our country. Guys like you are heroes in my book.

If you want more stats, post what part of Oceanside you are in and I will post the active/pending ratio, and other information that I am not so sure your property manager gave you.

SD Realtor

[SD Realtor]

I would keep it as well. I have a couple of listings in Oceanside and it is a grinder market up there. I am skeptical about the 475k-500k estimate for the sale of a 3/2 even if it is quite fixed up. If you are even breaking even on the cash flow then you are doing okay. My advice would be to keep it, save as much cash as you can so that when you come back you can use what you save for a dp on another property.

Thank you for serving our country. Guys like you are heroes in my book.

If you want more stats, post what part of Oceanside you are in and I will post the active/pending ratio, and other information that I am not so sure your property manager gave you.

SD Realtor

[Anonymous]

This is a no-brainer, SELL IT!. You won’t be coming back to SD for at least 3 years, so by then the market here will have completely tanked. Use that money and invest in other things. If you have no plans to live in that house in the long run, dump it now while you can still turn a nice profit.

[Anonymous]

This is a no-brainer, SELL IT!. You won’t be coming back to SD for at least 3 years, so by then the market here will have completely tanked. Use that money and invest in other things. If you have no plans to live in that house in the long run, dump it now while you can still turn a nice profit.

[no_such_reality]

Deadzone, I don’t think you thought that through.

1. He’s had it rented since 2000. That means he doesn’t qualify for the capital gains exemption.

2. His current price structure is based on the prior market bottom. He will not see that price again.

3. Having had it rented for the six years, that depreciation he’s been claiming will come back as taxable capital gain.

4. His selling costs will be 5-6% minimum.

By selling, he’ll realize a 25%-30% drop due to the sales cost and tax hit on capital gains and a lowering of his basis cost. Add that to fact that since it’s a rental, it probably isn’t “prime” condition and that housing market is already 10% or so off peak and basically, if he sells now, takes the tax hit, he might be able to get back in for what he netted if the market collapses 40%-50%.

[no_such_reality]

Deadzone, I don’t think you thought that through.

1. He’s had it rented since 2000. That means he doesn’t qualify for the capital gains exemption.

2. His current price structure is based on the prior market bottom. He will not see that price again.

3. Having had it rented for the six years, that depreciation he’s been claiming will come back as taxable capital gain.

4. His selling costs will be 5-6% minimum.

By selling, he’ll realize a 25%-30% drop due to the sales cost and tax hit on capital gains and a lowering of his basis cost. Add that to fact that since it’s a rental, it probably isn’t “prime” condition and that housing market is already 10% or so off peak and basically, if he sells now, takes the tax hit, he might be able to get back in for what he netted if the market collapses 40%-50%.

[noone]

If you had bought later than ’98, even like ’01-’02, I would suggest selling. But you bought before the insanity hit, in fact pretty near the bottom, so you’re probably sitting on a great thing. If you are planning on returning to SoCal, keep it! In the next 3 years it’s value may go down, or it may go up. Most of us here think down, but no one really knows for sure. One thing that is pretty certain though is that it will behave just like most other properties in SoCal. So even if it does go down, so will everything else in the area.

If your plans were to live in another part of the country, sell it!

I wonder if you might not be able to lower your monthly obligations, thus improving your cash flow, by refinancing with a 15 year mortgage. It will probably depend on your current interest rate, and the costs associated with a new loan. What do others think of that idea?

[noone]

If you had bought later than ’98, even like ’01-’02, I would suggest selling. But you bought before the insanity hit, in fact pretty near the bottom, so you’re probably sitting on a great thing. If you are planning on returning to SoCal, keep it! In the next 3 years it’s value may go down, or it may go up. Most of us here think down, but no one really knows for sure. One thing that is pretty certain though is that it will behave just like most other properties in SoCal. So even if it does go down, so will everything else in the area.

If your plans were to live in another part of the country, sell it!

I wonder if you might not be able to lower your monthly obligations, thus improving your cash flow, by refinancing with a 15 year mortgage. It will probably depend on your current interest rate, and the costs associated with a new loan. What do others think of that idea?

[(former)FormerSanDiegan]

n_s_r – Thanks for hitting the nail on the head. People need to consider the guaranteed money spent in taxes and selling costs today, versus potential future losses.

Assuming inflation, a dollar spent today is more valuable than a dollar lost in the future.

[(former)FormerSanDiegan]

n_s_r – Thanks for hitting the nail on the head. People need to consider the guaranteed money spent in taxes and selling costs today, versus potential future losses.

Assuming inflation, a dollar spent today is more valuable than a dollar lost in the future.

[Anonymous]

NSR, good point about the capital gains tax. But I still say SELL. If he doesn’t plan to live there in the future, then what is the point of hanging onto it? He’ll still have to pay capital gains tax if he keeps renting it and sells in 3 years.

Get as much profit out of it while you can. We can all debate here how much prices are going to go down in SD, they may or may not ever return to 1998 levels. However, I don’t think anybody here really believes prices are going to go up in the next 3 years.

Sell now, take your 150-200K after tax profit. Invest it in something other than real estate, and you’ll have a kickass down payment to buy the house of your dreams in 3-5 years.

[Author]

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