I was asked: “Have you calculated the gains taxes you’d have to pay if you sold? Would selling the condo still pay off your revolving credit?”
Selling the condo would pay off the revolving credit, basically what is charged on the credit card is school tuition, a down payment for our third house and moving expenses, so I don’t think we would charge our credit cards back up unless we needed lots of money all the sudden for buying more houses. We tend not to charge unneccessary expenses on the credit card.
Since we lived there right at 2 years within the last 5, we would fall under the exclusion of paying federal taxes on selling a house we used as a principal residence. We have another year to think about selling it to gain this exclusion in paying taxes.
I’m expecting a child and would like to stay home, but at this point with the debt, I have to continue to work until my husband makes more money.
Thinking about holding on to it, it would be nice to know we would own a property free and clear in 11 years.
My husband and I own 3 properties right now, 1 owner occupied worth around 100K, and the 2 others are condos, one we rent breaks even to pay the mortgage and then the one we are thinking of selling has about $150 positive cash flow per month. The first one we bough which has appreciated quite well in the last few years. We have approximately 10K in credit card debt and about 13K outstanding of 20K in our revolving credit line of the 2nd condo we used to live in. Selling this first condo, would pay off all this debt.
Our first condo, we lived in just under 2 years, is now a rental and has appreciated quite well in the past 3 years. According to the realtor who we bought it from (she lives in a neighboring condo in the same subdivision) it could currently sell for around 75K. We bought it in '98 for 50K. it’s on a 15 year loan at 6.75 APR, monthly payments are $500, condo fee $45 and we rent it for $700. We have 10K in equity. The lease will expire on the current tenants in about 5 months. We can drop the PMI in about a month, so the payments would then be around $475 (so).
We thought of selling it to take the money to pay off our other debt and/or find another house.
On the other hand, if we held onto it, it would be paid off in 11 years and we would own a property free and clear.
To me both options look good, but I have some time to think about this. Any suggestions?
Re: Sell a rapidly appreciated condo or hold on? - Posted by David H
Posted by David H on February 08, 2002 at 19:18:32:
>Selling this first condo, would pay off all this debt
It would… until you racked up the credit cards again.
I would use the $150/month positive cash flow to accelerate payoff of the expensive credit cards, and then I’d chop up the credit cards and get to work on the LoC.
Have you calculated the gains taxes you’d have to pay if you sold? Would selling the condo still pay off your revolving credit?
If I were in your shoes, I would keep it. Can you pay off the credit card debt and the revolving credit line either all at once or over a period of time without selling any properties? That would be the prudent thing to do.
My mantra is buy and hold. Get good tenants and try to keep them forever. It is simple, and it does not sell books and tapes, but it is how most people who became wealthy through real estate made their money.