All Forum Posts by: David Cole

Ok, thanks again for the feedback. I have most of my net worth invested in stocks and bonds, so renting this condo out will be a way to diversify. Going forward, a 7% ROI (on principal paydown) could very well be higher than the return on stocks (& certainly bonds). And if I'm careful about selecting good tenants, it will involve less risk than investing in stocks.

@Kevin Siedlecki  Thank you for the feedback.  I make 90k a year and am not really concerned about cash flow... it's not important to me.  Rather, I am interested in using other people's money to build my net worth while I'm living in the area.  Your recommendation of using the $100k in equity to buy 2-3 properties makes sense, but I have no interest in getting involved in that.  At most I'd be willing to deal with this one property that I already have.  

I've moved in with my partner & am considering whether to rent my condo out, which is just a few miles away.  Because the condo is so close I think it would be fairly easy to deal with.  Here are some numbers:

$119,450 balance on a 2.5% fixed rate mortgage with 179 payments remaining (I have no other debt). The condo is valued at $230,000 (close to what I originally paid for it).
The monthly payment is $1,375... approx. $750 of that payment goes towards condo HOA dues, property taxes, mortgage interest, & hazard insurance... the rest goes towards principal.
The condo would rent for $1,500/month (I've realistically compared it to similar condos).

I don't anticipate any major repairs/upgrades anytime soon... the HVAC, appliances, & windows were recently replaced, there's new paint throughout, & refinished hardwood floors.

Does it make sense to rent the condo out or sell it?

Any feedback would be much appreciated.

 This puts things into perspective, although investing the $232,000 & earning 5% would likely involve more risk (i.e., investing in the stock market).  But the 1. liquidity and 2. not having to deal with tennants and 3. possibility that they'd screw the condo up would likely make up for the risk.

Thank you for the feedback. I know the condo fee turns it into a not-so-great deal. I'm surprised that condos in northern VA don't rent for more (considering the condo fees).

Russell, the condo is located in Belle View, a mile down the Potomac from Alexandria, VA. Those who work at Andrews Air Force Base and Fort Belvoir (among others) live here, so there's a pretty constant demand & it's in a nice area.

I'm considering buying a condo & renting it out during my retirement as a source of income.

I'd pay approx. $232,000 cash for the condo.  It would rent for ~$1,500/month.                                                                                         

The HOA dues are $350/month, property taxes are $230/month, and insurance $20/month. I anticipate approx. $50/month in maintanence. Without accounting for deducting these expenses on my tax return, the numbers break down like this:

$10,200 annual return (annual rent minus expenses)  divided by $232,000 (total investment) equals 4.4%.  This will be higher after deducting the expenses on my tax return.

Based on these numbers, does this look like a good ROI? Why or why not?

Any specific feedback would be much appreciated!

 I am not familiar with homestead taxes- I will need to read up on this topic.

I bought it for $230k and have put $7k into it (new HVAC & small repairs).  It would probably sell for around $210k now.

Thank you for the feedback.  I just started a refinance to a _30_ year fixed mortgage, so after paying principal & interest, taxes, & the condo fee, $350/month will be left over.  

I have approx. $100k in equity.  If I sold the condo now, I would almost certainly lose at least $20k because the value has decreased since I bought it.

Thank you for the thoughtful feedback, Igor.  You bring up some important points.

I bought my condo 6 years ago and recent comps indicate its value is ~$20k less than what I paid for it.  This is (hopefully) mainly due to a slump in housing sales over the winter.  So I don't want to sell it for a loss.  I am not attached to it & would probably sell it otherwise.

My fiance & I have been together for several years and she lives just a few miles away... closer to both of our jobs.  So it makes more sense for us to live at her home.  When I rent out my condo, it won't be such a hassle to deal with because it'll be so close.  We understand that I won't be able to easily move back to my condo once a lease is signed on it.  If we weren't stable as a couple, I would not be considering this.  The only question we need to answer is how much I will contribute towards living expenses at her home.... perhaps it will be half of the rental income I receive from my condo.

Based on the sound advice here, I've started the refinance to a 30 year mortgage.  With the lower payments, I doubt I'll feel so rushed to rent it out to just anybody and can be picky about who the tenant is.  

So, I am in the process of refinancing in anticipation of renting my condo out.

I am refinancing it as owner-occupied because I live in the condo now.

How long do I need to live in the condo before I move & rent it out?

I am not familiar with these laws/regulations.