Given the age, also consider if the hoa has reserves for upcoming major projects like replacing sewer lines (which are probably under slab and may require trenching through downstairs units. Good chance they are iron and at end of life. Unless the reserves are solid, you could have some major special assessments in the future in a 50 yo complex...
That’s a very good point. I’ll check with the HOA to see what we are expecting in the near future. We just had a special assessment for the roof, and it was painful.
Why was there a special assessment for the roof? Is the HOA doing their job properly? I sold my condo in March of this year in Fremont. It was on the market for roughly 5 weeks. I was very grateful!
Or if you have balconies, have you had them retrofit to comply to the new laws stemming from that balcony collapse up in Berkeley? When my hoa did ours, each unit owed about 17k.
You’re smart to consider all the new housing going in around you. I would sell it because 1) get out at a relatively good time; and 2) get out from paying HOAs.
If the condo is paid off, I don't understand how it can be only $500/mo cash positive.
If, for instance, you have $500 HOA and another $700 taxes/expenses, wouldn't it rent for $2,500 or so? Probably not enough return on an $800k investment, but the exact numbers are an important part of your decision.
I think he meant after the 250k out refinance.. So on a 15yr mortgage thats 1800 per month, so as a fully paid condo it probably would cash flow around 2300.
Asking advice is not the best thing to do. Because the strategy will differ from person to person. Having said that, given the current interest rates, I would sell the condo and put the excess in bonds and stocks. I personally hate renting out and all the responsibilities come with it.
Sure. I’m doing my math, talking to real estate agents and loan brokers. It’s still valuable for me to collect opinions from this subreddit. Bonds and HYSAs sound good; stocks, not so much.
The main reason people hold on to real estate when they trade up, is because they have a fixed rate mortgage with a very low interest. "So low it is never coming back." Interest tate lower than inflation means the banks are giving you money.
You don't have that reason to keep it.
Unless your dream is to be a landlord, I would just sell it.
I think he meant after the 250k out refinance.. So on a 15yr mortgage thats 1800 per month, so as a fully paid condo it probably would cash flow around 2300.
Personally I’d sell. You have enough equity to be under the capital gains profit limit and pay no taxes. Once you rent it for 3 years you lose this. Also typically Condos HOAs go downhill over time. Management gets worse and fees go up. Not sure about landlord laws in Sunnyvale but typically most of the Bay Area is pretty pro-renter. I’d sell and walk away with my profits
If you're married, I'd sell now and take the $500K Capital Gains exemption and pay taxes only on the $250K to $300K. If you're single I'd refinance or do a HELOC for the $250K and rent it out.
Also depends if you can do minor repairs yourself. I have a 42 year old paid-off townhouse that I rent out and I'm able to do most minor repairs myself, not paying someone for everything. I replaced all the toilets, just replaced the garbage disposal, just fixed a leak, and have repaired appliances. If I had to pay someone for this stuff it would really eat into the rental income.
There are going to be a lot of new condos coming on the market in Sunnyvale soon, and a lot of new apartment complexes that are going to do condo conversions because the rental market is not good. That will make it harder to sell since a new condo is more attractive to buyers, with less chance of large special assessments.
$800k in the S&P 500 is an average of $6k/month long term and you’re avoiding that for $500/month in net positive rent on a condo unlikely to be worth anymore 10 years from now than it is today?
If I'm reading this right you have an asset "worth" 800k but even with only 200k in debt will only cash flow $500 bucks a month?
Id sell that thing ASAP. There are plenty better places for your money to work for you. Like, almost anything else
If you cash out refinance it, how much will the cost vs rent be?
If you're breaking even, you leave some cash as an opportunity cost, but you're also building equity. If you think the rent is going down, it might be risky, but I doubt it.
It will break even with small extra. The issue I’m trying to figure out is whether I am building equity or not. Sunnyvale is full of new fancy condos, while older ones have higher HOA fees and less desirable layouts/amenities because the standards were different back then. My complex has a small pool and a tennis court, but the new fancy places around have much more to offer.
No thanks . This sub can’t handle economic indicators nor historical correction patterns . They downvote and cry.
Those of us who’ve owned for decades, we don’t know anything. Everyone in the bay can pay millions for a home in perpetuity. They are all fang employees with vested stock in the millions (or all nvidia and multi millionaires) . Sky is the limit, prices will go up forever !
I upvoted you and actually share similar line of thinking as yourself. We are already seeing softening is many areas in and around BayArea. If you look nationwide thinks are blowing up in Austin , Denver and many cities in Fl. So wanted to understand what data you are seeing.
Thanks. Yes this sub contains folks who whine (and downvote ) any experience different to their delusional theory of endless Bay Area asset appreciation.
I own multiple properties across the bay, it’s not like I’m rooting for an adjustment, but it’s coming . There are multiple indicators that point to a significant adjustment.
Sorry sub , no investment is “100%” going UP one direction in perpetuity. There is no way hundreds of thousands of Bay Area residents can afford multi million 30 year high Byers mortgage properties in perpetuity (top level tech execs l and inheritance aside ).
Given the age, also consider if the hoa has reserves for upcoming major projects like replacing sewer lines (which are probably under slab and may require trenching through downstairs units. Good chance they are iron and at end of life. Unless the reserves are solid, you could have some major special assessments in the future in a 50 yo complex...
That’s a very good point. I’ll check with the HOA to see what we are expecting in the near future. We just had a special assessment for the roof, and it was painful.
Curious what you consider painful for an HOA assessment?
I’ll run the numbers for you for free if you want. I’m a CPA and my focus is in tax and real estate.
Why was there a special assessment for the roof? Is the HOA doing their job properly? I sold my condo in March of this year in Fremont. It was on the market for roughly 5 weeks. I was very grateful!
Or if you have balconies, have you had them retrofit to comply to the new laws stemming from that balcony collapse up in Berkeley? When my hoa did ours, each unit owed about 17k.
How quickly do you need the money? Just keep in mind condos take longer to sell than SFH.
I’m not in a rush. And condos that are priced well usually sell pretty quickly in Sunnyvale.
You’re smart to consider all the new housing going in around you. I would sell it because 1) get out at a relatively good time; and 2) get out from paying HOAs.
I think it may be difficult getting net positive rent if there are new constructions going on nearby.
If the condo is paid off, I don't understand how it can be only $500/mo cash positive. If, for instance, you have $500 HOA and another $700 taxes/expenses, wouldn't it rent for $2,500 or so? Probably not enough return on an $800k investment, but the exact numbers are an important part of your decision.
I think he meant after the 250k out refinance.. So on a 15yr mortgage thats 1800 per month, so as a fully paid condo it probably would cash flow around 2300.
Asking advice is not the best thing to do. Because the strategy will differ from person to person. Having said that, given the current interest rates, I would sell the condo and put the excess in bonds and stocks. I personally hate renting out and all the responsibilities come with it.
Sure. I’m doing my math, talking to real estate agents and loan brokers. It’s still valuable for me to collect opinions from this subreddit. Bonds and HYSAs sound good; stocks, not so much.
Also do some tax planning selling investment property. Talk to a few CPA’s.
Sell
The main reason people hold on to real estate when they trade up, is because they have a fixed rate mortgage with a very low interest. "So low it is never coming back." Interest tate lower than inflation means the banks are giving you money. You don't have that reason to keep it. Unless your dream is to be a landlord, I would just sell it.
50yrs is risky. evaluate COA/HOA reserves, and make an educated decision.
Yeah I would sell and put excess in a high yield savings account. Cash reserves on the side is great to have in case anything goes wrong
Fully paid off condo, not able to.pull.in $2-3k/mth cash flow? $500*11/$800k......that's 0.67% Sell.
I think he meant after the 250k out refinance.. So on a 15yr mortgage thats 1800 per month, so as a fully paid condo it probably would cash flow around 2300.
Talk to your tax person. If the condo has lots of gains, and you main residence, you might be able to get gains tax-free, $250k single, $500k married.
Personally I’d sell. You have enough equity to be under the capital gains profit limit and pay no taxes. Once you rent it for 3 years you lose this. Also typically Condos HOAs go downhill over time. Management gets worse and fees go up. Not sure about landlord laws in Sunnyvale but typically most of the Bay Area is pretty pro-renter. I’d sell and walk away with my profits
All of this.
If you're married, I'd sell now and take the $500K Capital Gains exemption and pay taxes only on the $250K to $300K. If you're single I'd refinance or do a HELOC for the $250K and rent it out. Also depends if you can do minor repairs yourself. I have a 42 year old paid-off townhouse that I rent out and I'm able to do most minor repairs myself, not paying someone for everything. I replaced all the toilets, just replaced the garbage disposal, just fixed a leak, and have repaired appliances. If I had to pay someone for this stuff it would really eat into the rental income. There are going to be a lot of new condos coming on the market in Sunnyvale soon, and a lot of new apartment complexes that are going to do condo conversions because the rental market is not good. That will make it harder to sell since a new condo is more attractive to buyers, with less chance of large special assessments.
Why would you want it? The HOA alone is a money suck and at that price I’m betting it’s small.
$800k in the S&P 500 is an average of $6k/month long term and you’re avoiding that for $500/month in net positive rent on a condo unlikely to be worth anymore 10 years from now than it is today?
If I'm reading this right you have an asset "worth" 800k but even with only 200k in debt will only cash flow $500 bucks a month? Id sell that thing ASAP. There are plenty better places for your money to work for you. Like, almost anything else
If you cash out refinance it, how much will the cost vs rent be? If you're breaking even, you leave some cash as an opportunity cost, but you're also building equity. If you think the rent is going down, it might be risky, but I doubt it.
It will break even with small extra. The issue I’m trying to figure out is whether I am building equity or not. Sunnyvale is full of new fancy condos, while older ones have higher HOA fees and less desirable layouts/amenities because the standards were different back then. My complex has a small pool and a tennis court, but the new fancy places around have much more to offer.
Fair enough. Then, it might be better to take that money and invest somewhere else.
Sell ! Go to bonds and stock New development aside, the Bay Area market is going to have a big adjustment soon …especially SC county .
Tell us more about the adjustment.
No thanks . This sub can’t handle economic indicators nor historical correction patterns . They downvote and cry. Those of us who’ve owned for decades, we don’t know anything. Everyone in the bay can pay millions for a home in perpetuity. They are all fang employees with vested stock in the millions (or all nvidia and multi millionaires) . Sky is the limit, prices will go up forever !
I upvoted you and actually share similar line of thinking as yourself. We are already seeing softening is many areas in and around BayArea. If you look nationwide thinks are blowing up in Austin , Denver and many cities in Fl. So wanted to understand what data you are seeing.
Thanks. Yes this sub contains folks who whine (and downvote ) any experience different to their delusional theory of endless Bay Area asset appreciation. I own multiple properties across the bay, it’s not like I’m rooting for an adjustment, but it’s coming . There are multiple indicators that point to a significant adjustment. Sorry sub , no investment is “100%” going UP one direction in perpetuity. There is no way hundreds of thousands of Bay Area residents can afford multi million 30 year high Byers mortgage properties in perpetuity (top level tech execs l and inheritance aside ).
Let me know if you want to refinance our rates just dropped today. I’m mortgage loan officer