selling the condo?

[Jonas Masikat]

new member here...

I've been reading the posts and listening to the podcasts and they've been all very informative. I do have a question, which I believe I know the answer to it already. However, I'd like some feedback to whether it's the right time to sell.

I own a condo in San Francisco, CA since 2005, lived in it for a few years, moved out, had it rented for 2 years, moved back and lived for 2 years or so, and since 9-2012, it has been a rental (although the rent has been more since I've left the 1st time). I've been sort of following real estate prices around the area, and it seems like I have some equity here. The question is how much..

I'm currently negative cash flow on it to the tune of .... a "G".. including property taxes and HOA; I bought it with no money down back in 2005, and refinanced a year later. I know.. I know.. I should probably sell, but here's the argument against it: I spoke to a couple of real estate agents, and they say that according to the comps; I can probably sell it 750K to 825K. I owe 550K on it. Properties listed get offers and are in escrow within a week. A lot of them have multiple offers. Rents are expensive, and according to my property manager, there is such a shortage of rentals in my area, that raising my rent 5-7% is not unreasonable... All this leads to my humble conclusion that it's quite possible for property values to rise further in the near future... hence one of the reasons I'm not selling... yet..

I tried to refinance the property about 6 months ago, but the bank wanted at least 25% equity. I think I have that now, and am thinking about going that route. If I do go that route, I think I would still be cash flow negative but a couple of hundred bucks vs. the G earlier. That being said, I could put money into the property, getting it closer to that magic 25% number. I have the funds to do this, but it would leave me with very little liquidity-- hence house poor. That is one of the main reasons I'd like to wait a bit longer and sell it in the summer of 2014 if possible.

After reading the posts, and listening to the podcasts, the prudent thing to do would be to sell it now.. ASAP! I'm grateful for the appreciation in equity, and I know it's hard to count on it in the future. It's all about cash flow. The other reason I don't want to sell, is an emotional one. I've become attached to the condo, and again in my humble opinion, would like to think that it would be worth more in 5 years or so.

The flip side of this is to sell it.. realize the gain, and then invest in a property where the numbers make sense. I spoke to my accountant about it, and she stated that since I've lived in it for 2 out of the last 5 years; as long as my gains are under 250K, they would all be tax free.

Any thoughts would be appreciated.