Should I buy and hold?

[Russell Odom]

Hi BP Community, have a situation and would value some input.  First time contributor.

I purchased a new build condo/townhome in Austin, TX 78748 that is just now being completed. A lot of life happened over the last year and I am not confident that it will be a good solution for me to live there for any extended period of time. I have 6,500 invested at this point for the non-refundable deposit and cost for design upgrades. Total cost is 261k and total monthly expenses for P&I, Taxes, Insurance, and HOA will be just shy of 1,600. This is with 25% down.

I have considered trying to turn this into a rental - but the rental comps aren't too encouraging with 1,600 being the most I could rent for.  Probably more like 1,550 if were rented today.

Real Estate and rental appreciation has been strong year over year. But I am trying to decide whether renting for next to 0 in monthly cash flow for a year or two and counting on rents rising is a silly idea or not for a long term buy and hold property.  The alternative would be to back out and lose the $6,500 that has been invested to date. 

Looking forward to your thoughts.  Let me know if there is more detail I can provide. 

[Kris Wong]

If it's a new build, have you tried speaking with the builder to see if they will refund your earnest money? A fair share of builders don't want a blemish on their reputation from keeping someone's earnest money if the property no longer works for them, even though contractually they are able to do so. I would start there.

I know it would suck to lose $6,500, but cash is king and that's not a super effective use of capital. You're talking about locking up 10x that amount if you close.