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Updated over 10 years ago, 07/14/2014
Should We Buy Out Interest in Low-Priced Condo? Hold or Sell?
After our brother died a couple of months ago, my sister and I inherited his 2bd/1ba 885 sq. ft. condo in Stockton, CA. Unfortunately, it's not in the greatest of areas, and the highest sale price lately has been $53k. Rents in the complex generally go for $650.
My sis had rehabbed a couple of houses in Phoenix but didn't make any money. Meantime, hubby and I have an LLC with a couple of rental properties (a condo and a house) in much higher-priced areas in OC and San Diego Counties and never have flipped before. Honestly, the relationship my sis and I have is shaky and could be strained by working on a project together.
We have to rent it out because we're losing money on the $250 HOA fee. It needs work (hopefully for $5k or under) even to put it on the market as a rental while it goes through probate, which can be as long as a year. We live out-of-state, and our project manager (who also flips and rents) says that it may take 2 or 3 years for the value to rise as little as $10k. Its original sale price was a bit over $100k.
We had planned to buy my sister's interest after it had been rehabbed and hold it as a rental, but now we're not so sure. Figuring in the HOA, the 10% PM fee (which only might come to $65), insurance and taxes, there's not much left. Doesn't speak highly of being a long-term rental.
Question: It could cost us over $25k to buy my sister's interest. With figures so low, is that advisable? Would it be better to do as little rehabbing as possible and then sell it as soon as we could?