All Forum Posts by: David Cole

 Other than perhaps paying down the mortgage on my home to get rid of the mortgage insurance, I don't really need the cash/equity from this rental condo.  Right after I made this post here I received another offer... I don't think people are normally thinking of real estate transactions the week of Thanksgiving.

I have a condo that I used to live in that I've been renting out. Two months ago I put it on the market to sell. The condo is in northern Virginia, 6 miles from where the new Amazon headquarters will be in Crystal City, and 5 miles from where the new Virginia Tech campus will be. It's close to a yellow line metro station that goes to Crystal City/new VA Tech campus. Over the past two months the condo had a moderate amount of viewings, but no offers until now (coincidence?). With the new Amazon hq news, I'm tempted to keep the condo & continue renting it out. I live a few miles from the condo & manage it myself.

Here are the numbers:
Value: ~$230,000 (approx. the same as when I purchased it in 2010... the main reason I put it on the market two months ago)
Rent: $1,600/month (current market rate... might be able to get more but the # of applicants would significantly decrease)
P&I: $800/month on a 2.5% 15 year fixed rate mortgage (with 156 months remaining). Currently ~$220 goes towards interest and ~$580 towards principal. The current loan amount is $106,475.
property tax: $240/month
HOA fee: $360/month
So, a monthly cash flow of only $200, but the principal is being paid down pretty significantly with the 15 year fixed rate mortgage. I have a stable job & emergency savings, & don't need cash flow.
Approx. 20% of my net worth is in this rental condo & my own home (the rest is invested in tax deferred accounts- Vanguard & Fidelity index funds).
If sold, I would need to pay 5.5% in real estate agent commissions & approx. $1,800 in other fees.

If I sold the rental condo, I would either:
1. Pay down the mortgage on my own home by $50,000 to reach 80% LTV (because I only have 5% equity on a 30 year 4.5% fixed rate mortgage with $80/month mortgage insurance).
and/or
2. put the proceeds from the sale of the rental condo in a tax efficient index fund, like VG consumer staples index or total stock market index.

Given this info., would you recommend keeping the condo & renting it out to see if the value/rent increases?

Any feedback would be much appreciated.

 Yes, I would have to pay approx. $12,000 in capital gains tax if I sold the stock for the down payment & closing costs ($5,500).

Hello!  I live in northern Virginia, just outside of Washington D.C.  I rent out a condo and am considering buying a 2nd condo in the same condo community to rent out.  Here are the details:

-1 bedroom 600 sq. ft. condo near the Potomac River.  New hardwood floors, new kitchen (floors, cabinets, counters, appliances including dishwasher), new windows, new HVAC, new paint, new lights/fixtures.  In other words, I would anticipate little maintanance.  It looks very very nice compared to most condos in the community & should rent easily.                                                                                                              

-Purchase price will be ~$200,000.                                                                                                                                                         

-Gross annual income at least $16,800, (but perhaps as much as $18,000).

-Annual condo association dues $3,360

-Annual property taxes $1,900

-Annual hazard insurance (in addtion to the condo master policy paid through the condo dues)  $250

-Anticipated average annual maintenance $500

Given this info., I calculate the cap rate to be around 5.5%.  The average cap rate for such property in this area is 4.5-5%  (plenty of jobs, very well educated workforce, high demand for housing, etc.)

I don't have $200,000, but do have $40,000 invested in stock index funds that I can sell to make a 20% down payment.  I have been approved for a 30 year fixed mortgage @ 4.625% (investment property rate) with the 20% down.  Here's how the monthly payments would break down:

P&I: $822

condo assoc. fee: $280

Property tax: $158

Hazard insurance: $20

Total: $1,280

Since it would rent for ~$1,400 - $1,500 per month, I realize that there is basically no cash flow.  But I am not interested in buying additional rental properties.  Instead, the idea would be to diversify my net worth... currently 80% of my net worth is in stocks & bonds.

Given the situation, does this look like a good deal?

Thank you for the feedback, it is much appreciated.

Thomas S., you put things into perspective and this is how I will operate.

My tenant has not paid rent for June as of this evening, June 6.  The signed lease states "Rent shall be paid on the first day of each calendar month.  If tenant fails to pay the rent in full before the end of the 5th day of the month, tenant will pay landlord a late charge of $75, plus $25 for each additional day that the rent remains unpaid past the 5th day of the month."  When the tenant signed the lease I told her this verbally as well.  These late charges are permitted by law in my state (Virginia).  Rent is paid by personal check.

This morning I emailed the tenant to let her know that I had not recieved the rent and that the late fees apply.  The tenant's response was that she is in Seattle on a work trip and she mailed a check from there (obviously not in time to arrive before the 5th) and because of this, is asking me to waive any late fees.  The tenant has lived in the rental since February 1st 2017 and the rent has arrived on the 5th each month, so I figured something like this would eventually happen.  

I don't think I should be "flexible" with her, as she was not proactive in telling me about mailing the check late and because it would set a bad precedent, not to mention that the terms were clearly spelled out.  How would you proceed?  Since a check may already be in the mail, should I tell her that she will need to send a separate payment for the late fees?  Any advice would be appreciated... this is my only rental & first experience with a late payment.  

A rental condo of mine is currently vacant.  I have just found a well-qualified tenant.  In my market I've found that the holidays (generally late November to the end of January... perhaps longer if winter weather is nasty) are the absolute most challenging time to find tenants.  The tenant does not want to move in until February 1-  just over a month from now.  The likelihood of finding a qualified tenant before February 1 is "very slim" (definitely less than a 50/50 chance).  The condo will rent for $1,500/month with a $1,500 security deposit.                                                                                       

If I decide to go with this tenant, what is the best way to procede?  Request a nonrefundable $1,500 retainer fee which would convert to the security deposit on February 1st?  Have them sign the lease at the time I collect the retainer fee?  Then give them the keys when they pay February's rent?                                                                                       

I have not expereinced this situation before so any tips would be much appreciated!