Sell in hardship or ???

Question

Sorry I posted this twice. I put it in the wrong discussion forum before.

I am out of work and my husband will loose his in October.

I have some money in a IRA. About 13k

I own a condo rental in another state. It's in a killer location in Dallas. Rents for $900/mo. Old building near new stuff. Makes about $250/month after taxes, insurence, HOA, and saving $2500 a year for inevitable repairs. (Spent 2500 already).

We own it 100% no mortgage. I don't want to sell...but

Kept it because we hoped the location real estate prices would go up.  Right now, after fees it may break even.

Technically it has gone up, but I inherited it and the price associated was inflated about $8k. (Mom didn't hire the right person).

Anyway.  We are both smart and educated, we will find jobs but not quickly.  With bills piling up, I see the we worst. We live in SF, the most impossible city and will be forced to vacate by November if I did my calculations right.

So, sell home or be homeless is what I see as my future. I wasted a lot of time thinking things would get better soon. But with a month till poverty or giving up my savings, this condo feels like dead weight.

Asked hubby if he would move to Dallas and look for work. He said no because he would have to leave his kids so that feels out of the question as well.

Advice is needed. Raising rent not an option in this place... already at top end for a 1968 building.

Is there a way around selling or ways to get support? We are already paying off student and healthcare loans, so another loan may not be possible.

Thank you so much to whomever answers. I've never been in this situation and I'm truly scared for my family.

Alberto Camacho · Answer

I've invested and continue to educate myself in investment strategies. Obviously my approach is just my view and you should decide what is best for you.

There are some aspects of the post that cause me concern. A free and clear property that breaks even doesn't sound right.

Brent hit on one aspect. It's time to downsize. Just I would not stop there. I'd take a hard look at the budget and takes steps to eliminate and minimize all re-occurring expenses.

Only after addressing expenses I'd look at selling the condo. Yup I'd sell.

It's a seller's market in DFW. While it would be great to hang on it hasn't been a winner. We make our money on the buy. It doesn't sound like that happened here.

All investors review their portfolios and drop the worst from their heard.  If necessary I'd take the minimum possible funds from the sale  and get my affairs in order. With steps to reduce spending those funds will go much further. Once the JOB is back on it wont be too long before saving add up and one is able to re-invest in a property that cash flows.

I'd move IRA funds while between jobs into a self directed IRA. I'd use those funds to invest in real estate that provides positive cash flow after all expenses are covered.

Sorry to hear you going through this. I also have lost employment on more than one occasion. Find strength in knowing this happens to all of us at some point in our lives. You will come back from this stronger than ever.

Account Closed · Answer

Not meaning to harp on the issue, but having only enough money to pay rent for the next 2 months an emergency.  If you don't have cash coming in to pay December's rent and don't have people you can borrow from, then your condo needs to be listed yesterday.  A 60+ day close is the norm on residential real estate, especially if your target buyer is a typical first time home buyer.  Get on that asap.

Account Closed · Answer

I can't tell for sure but it sounds like maybe you've never sold a property before?  You don't base your asking price on "getting back" the assessed value upon inheritance. You base your asking on comparable sales.  Why not consult with an agent and get an informed opinion of value, days on the market.  The agent will also do a net sheet and show you what your proceeds will look like.  Condos are a specialty in many markets.  Good condo agents have buyers lists.  So you want someone who has sold condos in your complex or others nearby.

Alison L. · Answer

Great advice.  Sell it is! I have a realtor and have done all the comparisons. I gotta tell my new renter. I know it will go up in value but it's been 10 years. Letting go!

Jobs is SF are great for hubby. Me, not so much. That's a long long story not for this forum. Needless to say I can't wait till kids are grown and can get out of that area. 3 years and counting!

Andy Mirza · Answer

Lots of fantastic advice here.....

Sell the condo ASAP. It is WAY better to have reserves and not end up needing them than to be in the opposite situation. As another person already mentioned, if you wait and decide to sell later you might become a desperate seller and your situation will end up being worse.

The reality is you don't know exactly when you'll get another job, right? It might take longer to get hired than you think. If the same happens to your husband and you're both out of work for much longer than you anticipated, your situation will be even tougher. Sell the condo, put the net proceeds in the bank, and weather out your storm. It will get better but do what you have to do and go in survival mode first. It might get worse before it gets better but it will get better. Good luck!

Chin P. · Answer

iI you're desperate, have you considered taking on a roommate or two? If you have spare bedrooms to rent it may help ease your monthly spend.  Are there ways to make some side income while you're looking for jobs?  Even if it's only something like Uber, that's better than nothing.  How much unemployment insurance will you get?

Are there expenses you can cut now like cable, data plans on phones, etc to preserve your cash?  Can you move in with relatives and rent your current home for profit?  If you're currently renting can you cut the lease (some leases will let you terminate early due to job loss and if not if you give the landlord as much notice as possible they may work with you and more notice means a better chance landlord can find a replacement tenant so that lease break charges to you are minimized) and move in with relatives or at least a cheaper rental?

Doesn't help you now, but when you do get back on your feet live below your means and build an emergency fund and start saving for the future so you aren't placed in a similar position again.  No judgements here.  You not having your job and the aforementioned health care loans I'm sure also had a part to play in getting you to this point.

I know you're in a terrible position to be feeling scare like this.  If you need to sell the condo, decide that quickly so you can hopefully sell it for retail and not be forced into selling it for a fire sale price because you waited until the last minute when you need cash asap.  Even if you do sell, drastically cut your expenses now in order to stretch those funds as long as possible and don't depend upon you getting jobs quickly to remedy matters.  Lots of people during the crash burned through their savings by maintaining their livestyle and hoping that they would find a job soon. I'm not saying you can cut every expense but cut every expense you can.  Last thing you want to do is sell this condo and be on the verge of homelessness 6 months from now because you kept spending like you did when you had jobs.

Hope things work out for you.  Best of luck.

Account Closed · Answer

Alison L. From what I see the job market in SF is really hot. Why would it take long for either you or hubby to find decent jobs, especially if you are in tech? I see the desire to live in SF but just across the bay you can get a SFR for the same rent as your crappy 800 sq foot apt. And BART across the water is really not that bad. People who live in the city seem to think nothing else is even acceptable (New Yorkers have the same attitude) but if you cant afford it, you cant afford it!

Brent Coombs · Answer

Alison L., you didn't tell us about your own home. Might it not be a good time to sell anyway (down-size, buy a relative dump or those sort of options)?

If SF is currently the most impossible city, mightn't that work in your favor?...

Alison L. · Answer

we have reserves till Nov. 30th for sure. So we are OK.

Thanks everybody so much. I feel like I got great advice and I was able to model each idea to see the outcomes. Keeping is good only if I put on $15k and I don't see a return for 4 years!  I hope to rejoin the renters again soon.

We will make it. SF just got the the best of us like so many people.  You will see a lot more of people like me coming from there.

Sell in hardship or ???

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