Posted by Frank Chin on March 23, 2001 at 18:07:40:
Sorry I posted the response in the wrong location. See my other post regarding selling the unit.
Condo with equity-sell it or lease it- or other? - Posted by Jeff
Posted by Jeff on March 23, 2001 at 07:05:13:
Would like opinions on this situation:
I own a condo, value $125,000. I have owner occupied it for the past 2 yrs. Owe $68,000. Financed with 15 yr mortgage. 10 yrs remaining. payment is $858 plus $235 assoc fee. Property will rent for $1000.
Seeking to maximize return.
Sell now to take advantage of zero capital gain?
Lease purchase?
Rent it and have a paid for property in 10 years?
Thanks for the opinions
How much did you pay for it ??? - Posted by Frank Chin
Posted by Frank Chin on March 23, 2001 at 11:00:33:
Hard to say without the key number - your original purchase price. Then we can see what the capital gains tax is.
Sell it or Not - Posted by Frank Chin
Posted by Frank Chin on March 23, 2001 at 18:02:01:
Hi Jeff:
If your numbers are right, you got yourself a nice capital gain, in a short period. Enjoy it.
There are several issues:
1- Pre-tax cash flow is running slightly negative, even before repairs.
2- You might run into a major repairs or assessments in the next three years.
3- The housing market is at the top of the cycle. Notice what happened to the stock market.
4- You might have a tenant who may not take very good care of the place if you rent it out.
5- The tenant may not move out exactly the time you want him to move out, and drag the sale past the deadline.
I am currently in the process of selling a condo myself since the last tenant kept it in mint condition. If I rent it out again, I might do a rehab before I can sell it later on. I’m also trying to lock in a good profit while the market is still good.
If I were in your shoes - I’ll take the profit now, tax free, and enjoy it. The question then is where are you going to invest it.
L/O would probably be better since you won’t have the unit vacant for a number of months.
Hope this helps.
Re: How much did you pay for it ??? - Posted by Jeff
Posted by Jeff on March 23, 2001 at 17:01:42:
Frank,
I should have included that little tid bit. I paid $93,000 approx 2.25 yrs ago. After expenses of sale and other real property improvements, I’ll have a good sized taxable gain if I convert it to rental property. My understanding is that, upon sale, one has to have lived in the property as primary residence for 2 of the last 5 yrs. So, I could rent it for 3 years and gain perhaps further appreciation.