All Forum Posts by: Madhur Mehta

Quote from @Chris Martin:

Quote from @Madhur Mehta:

Hello everyone, I have been grappling with the below question for the last few weeks.

We have a condo in downtown Chicago that we bought for $150k 10 years ago which generates ~$900 per month on Cash flow. The CoC is great and we don't have a mortgage on the condo, however the current market value of the condo is about ~200k, so very less appreciation in last 10 yrs.

Should I sell the condo and invest ~200k (minus fees) to buy an investment property with 30-40% down in an area (Durham, Raleigh) where I could expect greater appreciation down the road. With the current interest rates, I would be -ve cash flow 200 to 300 per month.

I am currently based out of Raleigh, NC.

Appreciate the help.

To me, I'd say stick with the Chicago condo. Unless there is something you aren't disclosing. Why? My two cents:

#1 - you give up $900/month POSITIVE cash flow for NEGATIVE $200-$300/month GREAT IDEA (Sarcasm)
#2 - see chart below. I contend you are buying at the top of the market. GREAT IDEA (Sarcasm)
#3 - there are tax consequences in ANY sale (even with 1031 exchange BECAUSE you HAVE TO BUY the replacement (otherwise what's the point of the exchange))
#4 - "buy an investment property with 30-40% down" ... "I would be -ve cash flow 200 to 300 per month" WTF! GREAT IDEA (Sarcasm)

As Gabe pointed out, with some saving discipline that positive cash flow can provide down payment when we get a softer market. In the short term, put that money into 5.5% treasury yield via TD and be patient. The WCMSA/RCMSA market is overvalued at present, but things can change in a hurry. We've seen it before, like 2008-1011.

Chris-  Thanks for all the feedback (Sarcasm) ;)

The only other thing to mention would be that there is a special assessment anticipated in the next few years which is estimated to be around $10-15k. 

In general, after reading all the comments we are leaning towards keeping the property and to use the cash flow towards another down payment in a few years. I have the cash reserve saved in HYSA at 5%; We will reevaluate the situation again in an year from now.

Thanks everyone on sharing your thoughts.

Hello everyone, I have been grappling with the below question for the last few weeks.

We have a condo in downtown Chicago that we bought for $150k 10 years ago which generates ~$900 per month on Cash flow. The CoC is great and we don't have a mortgage on the condo, however the current market value of the condo is about ~200k, so very less appreciation in last 10 yrs.

Should I sell the condo and invest ~200k (minus fees) to buy an investment property with 30-40% down in an area (Durham, Raleigh) where I could expect greater appreciation down the road. With the current interest rates, I would be -ve cash flow 200 to 300 per month.

I am currently based out of Raleigh, NC.

Appreciate the help.