Hoboken, NJ Apartment, Rent it out or Sell?

Question

hi bigger pockets community,

I am not sure if this is the right place for this question, so please feel free to let me know if I should ask it in a different section.

I bought a place in Hoboken nj within the last two years.  I figured I’d be in the place for at least 2-3 years.  For personal reasons, I may need to move a few hours away from NJ (likely the beginning of 2017).

i am trying to figure out whether i should sell my apartment now given the hot spring market.  If I do not sell, I could in theory rent it out.  Given where rents are at the moment for my apt compared to my carrying costs, I would expect to take a monthly cash flow loss of about $400 (plus whatever extra fees come up with the apartment itself, the condo association, and vacancy losses).  i can easily cover the cash flow loss each month.

i am trying to take into consideration that i would have had to rent an apartment these past 2 years if i did not buy this apartment.  As a result, adding up all of my entry/exit/carrying/capex costs from owning minus the cost of renting would likely be a smaller “loss” of 10-15K.

my question is, and i know this is a tough question, do i just accept my "loss" and try to sell this apartment now given lots of buyers and low interest rates or should i hold onto it, accept the cash flow losses, and hope that the appreciation in this area continues to increase as it has for many years at this point.  fyi, it is in a desirable location and close to transportation into Manhattan.  one other factor to consider is that i have a 7 year arm.  I also understand that Hoboken doesn’t seem to have the friendliest laws when it comes to being a landlord, so if this has any bearing on the decision, I’d appreciate hearing about that too.

Lilly S. · Answer

@Alok Sood Thanks Alok, unfortunately, there is no way to lower carrying costs for me (an avenue I have explored), have a great rate right now and if I do refinance at this point it would if anything add to the monthly mortgage. Didn't necessarily think making capex improvements that would cost a lot would necessarily make sense considering anything I would do would be quite pricey and would only get me 100-200 extra per month in hoboken's market.

@Ryan GoldfarbThanks Ed, I will reach out to you as I continue to think through this decision.

Ryan GoldfarbThanks Ed, I will reach out to you as I continue to think through this decision.

Thomas Butler · Answer

for sale my owner I would find a lawyer who can walk you through the steps.  Also a real estate may be open to providing advice if they get the business on your next house or apt.  Bigger pockets is also a good source

Personally I find it difficult taking a loss every month especially you have to think about expenses.  If you plan to hold make sure that 400 factors in expenses (AC, heating, hot water, and other items).  Additionally Hoboken went up a ton in recent years.  You need to also consider the possibility of value going down short term and if you comfortable holding this loss if something happens in your personal life.  Hope this helps and best of luck.

Bill Devola · Answer

@Lilly S.  You ask a difficult question that is a little like looking into a crystal ball.  Hoboken is hot now.  So are many areas in Jersey City.  But from my point of view, Hoboken is more "mature", meaning its not revitalizing.  Its value will appreciate, and probably commensurate with supply/demand in manhattan.  Basically, I wouldn't bet on values going up by 20% over then next 5 years.

That said, I think most people that hold real estate long term look back on the decision and say it was a good one.  Not like 1-2-3 years, but 10 years +.  This is a condo, so you know maintenance will be low.  Its Hoboken so you'll get a good class of renter/tenant.

My only advice is if you're going to rent it and lose that $400/mo, don't go in with the expectation of huge appreciation.  If/When it comes, its a bonus.

Lilly S. · Answer

@Thomas Butler  No have not tried to list for sale by owner as I don't have the experience.  Any recommendation as to how to do this?  Still very conflicted regarding taking a loss each month (though someone else will be paying down the mortgage) with the potential upside of holding this place longer term as I don't see the value of Hoboken going down any time soon and frankly, only see it rising (long term).  Let me know your thoughts.

Thomas Butler · Answer

Did you try and list it for sale by owner?  It will save you the 6% which in hoboken is a good amount.  If you list on Zillow im sure you will get hits if you sold before/ are experienced.

Edward Verdel · Answer

Hi @Lilly S., I'd like to offer my services to you.  I can come by and take a look at the property to give you an idea of what the market value would be in both scenarios.  This would be with no obligation to you.  It's not always an easy decision - but it's one that many Hoboken owners face when they move.  It's best to have all of the information at hand.

Let me know!

Thanks,

Ed

Ryan Goldfarb · Answer

Hey @Lilly S. --

What's the basis for your estimate of current market value (where you envision a loss upon sale)? Based on how tight the condo market is in Hoboken, it may be worth a bit more than you anticipate.

Feel free to shoot me a PM, and I'd be happy to put you in touch with someone who can run some comps and provide an estimate on the current value. Perhaps you could list it at a number that would allow you to comfortably exit, and reject anything below that and keep it as a rental?

Good luck!

And what's up @Alok Sood! It's been a while man!

Alok Sood · Answer

HI @Lilly S.. Having lived in Hoboken for the past 7 years I would say if I were in your shoes, I would attempt to either lower my monthly carrying costs by either refinancing or making some capex improvements to get higher rents so that you can at least break even on the cash flow. Or just cut my losses and move on. This crazy market can go up or down 6 figures within a year's time and might be riskier if you don't have a solid long term strategy.

Just my 2 cents :) Good luck!!

Hoboken, NJ Apartment, Rent it out or Sell?

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