Do you have $20,000 cash so you can sell with out a short sale?
My best guess is that the market will recover to 2005 levels in 2020..
you will need a CPA to do some of this math but
must assume you think condo will sell for about $ 60,000 ??? or is your loss on the price you bought it for?
Now its for sure I do not know anything about CA housing market, but just from news it looks like the State has some real problems, and they are about to get worse. I understand Companies are moving out of state to escape the Tax issues and other regulations.
If all this is so, then would not the Real Estate Market get WORSE there?
Florida has to look forward to the Baby boomer retirement decades.
So while CA real estate has many reasons to go down and Floirda Real estate has some very good reasons to go up you might be better holding you Winter Park Propety and rent in CA for a while.
Just a quess.
Let's put them both aside.
Dan Chase points out that you're now buying the condo for $300 / mo, whereas you can turn the deed over if you add $15,000 as a sweetener. It's like trying to get rid of Conan O'Brien.
What I'm wondering is, why, specifically, can't you buy that home in California?
When you have a investment property and want to buy another property lender only calculate %75 of rental income, means (700*.75=525) and 300+175= 475. -475 would be your net rent.
Most lender like the ratio be less than %45 ( ratio=all debt/Gross Income)
Lets do a little bit of work:
lets assume you buy your CA home for $X.
your payment Approximately ($X/100000)*583
Add up all your monthly payment and divided by gross income, if that comes less than %45 you dont have to sell your FL condo to buy new home, Now question is, does it make sense to keep it?
you mentioned that you will loose $20000 if you sell, $20000/$300=66 means you loosing for total of 66 months lost up front, Dont you think price will go up more than $20000 in 66 months?
My answer is Keep your Condo
"In case you wonder I am of the Chicago School, a devoted follower of the late Professor Friedman.
And I should note, there are those in the area that expect the Condo market to Crash another 20% in the next year. If we get the â€œnew and betterâ€ health plan, Cap and Trade and a few of the other gems flying around in Washington, these maybe the good old days."
I don't remember asking for a resume. Nice opinion overall and in general. But simply stated, opinions are like rectums.. everyone has one. I just do not agree with yours and I feel that we have a turnaround starting within the next 1.5 years and the property that this p[articular seller is talking about given te math, in my opinion has a better chance within the next two years of less of a loss.
Have you filed a tax return with this property included as an investment?
My guess is that it is cash neutral once you take into account depreciation and tax benefits. Consult your CPA for advice. Ask them what happens when you sell. A 1031 tax deferred exchange might be one way out.
In Winter Park, Florida
In 2007 the average condo price sold was $ 318,274.
In 2009 the average condo sold price was $ 130,475.
While I am not a mathematician, I am an Economist, and the above numbers cause me to conclude the price has dropped a good deal, rounded current sale is but 40.99 % of 2007 levels.
For current prices to recover to 2007 levels in 1.5 years, we are going to have to have a 245% increase in current prices. Might this be a little bold?
The only reason I think a recovery to 2007 prices by 2020 is that I expect runaway inflation due to the current use of Keynesian economic theory to cure our present economic problems. To recover to 2007 levels it would require about a 9% increase per year for next 10 years, or about 3 times the historical rise in home prices.
Inflation coupled with the retiring Boomer population, I expect Florida to again go though a Boom, but lets hope with out the bubble pop at the end.
In case you wonder I am of the Chicago School, a devoted follower of the late Professor Friedman.
And I should note, there are those in the area that expect the Condo market to Crash another 20% in the next year. If we get the â€œnew and betterâ€ health plan, Cap and Trade and a few of the other gems flying around in Washington, these maybe the good old days.
HHmm.. do the math.
I re- posted this to read the 2020 turnaround.... I originally put 2012.
And John , I think that this owner should see a much better inprovement over the next 1.5 years then a 2020 turn around on his property.
Can you afford the $300? If so, I would keep it. In the very long term it should be a good investment.
If you can't afford the $300 and a house payment, you will have to make a hard choice. Do you sell, do you move into the condo, do you keep renting?
I would doubt the condo would go to much lower in value unless your whole area is just crashing.
I would either say to sell now, or hold onto it as an investment. Come May 1 the $8k will go away. The mortgage rates should be higher, and buyers could be scarce. As a pure investment property it is not cash flowing well, but over time, it could be as the economy improves and peoples incomes go up.
My name is Rick Hose and I'm with Exit Martin. I would suggests getting a Great Realtor to walk you through this process. I enjoy working with out of state buyer. I also work with military and special needs families. I do things most Realtors do not. Call me and let's talk:)
Hope to talk soon,
I am not sure why you can't buy in California either other than maybe your concern of losing your tenant and having to pay the other $500. If that is a concern, I would wait.
As far as the condo market taking an additional fall, I would say that maybe in some markets this may be the case but our market doesn't show the signs of that being the case here.
AAA Realty LLC
55 Homestead Rd
Lehigh Acres FL 33936
Broke my own rule, which is to always check what other questions are being asked by the questioner. I see that yesterday you were asking about investing in Califorina. I agree with John, keep your money in Florida, for all our problems at least there's no chance of us sliding into the ocean during our life times.
Gavin, assuming that your loss of $15 to $20k is on paper and not a cash loss, then sure go ahead and sell it. That HOA won't be going down. You don't indicate how much the market would have to go up to get back you $15 to $20K, but if that represents an increase of more than 10% over it's current value, don't expect it any time soon.
Have fun, Mark
As stated the question is can you afford the $300. a month now and take advantage of the low home prices in California along with low interest rates?
If you buy a home in your home state and can't find a tenant for six months or I just read we are entering a renterâ€™s market can you afford to lower your rent or pay for extra services needed to draw a tenant due to competition from other units?
Hope this helps,
GRI, ePRO, Real Estate Broker & Realtor
Visit my Bio located here on Trulia, just scroll your mouse over my picture and left click, also visit my website for our short sale information center, complete foreclosure list and innovative tools helping with your real estate decision in the Central Florida area.
My "gut" way of looking at it is a bit different, but still . . . It's costing you $300 a month. Leaving aside any tax benefits (depreciation, etc., as well as the ability to deduct your losses from your income--check with an accountant for details), that's $300 a month, or $3,600 a year. You estimate that if you sell now, you'll lose $15,000-$20,000. The break-even point is at about 5 years--in 5 years, at the current rate, you'll lose about $18,000. That's assuming rents don't go up, and that the condo fee doesn't go up. Both probably will rise some. Recognize, too, that you're paying down on the mortgage, so you really are building up some equity.
Will the condo increase in value by $18,000 in 5 or fewer years? If so, it makes sense to hold on to it. Otherwise, no. I'm guessing, as John did, that you think it'll currently sell for about $60,000. If that's the case, then you'll need about 5% annual appreciation to get back to $80,000. Again, a bit less since in 5 years you'll owe less than $80,000.
Is 5% appreciation reasonable? Over the long term, it is. But this is a really unpredictable market. If I had to guess--and hopefully avoiding "irrational exuberance"--property values probably will bounce back. Slowly for a couple of years, then sharply after that. But that's only a guess. So, it's really kind of a close call.
I'm a bit more optimistic than John that it'll take until 2020. Still, he could be right.
A few other comments: You might be able to boost your income a bit by offering the property as a lease-option. But use realistic numbers.
And if you sell the Florida property as a short sale, you'll likely damage your credit to such an extent that you wouldn't be able to buy a better home in California for a while.
Finally, it really depends on your comfort level. Both your financial comfort level in spending $300 a month on the Florida property and on your comfort level with your current accommodations in California. If you've got a decent place in California--you're reasonably content there--and the $300, while unpleasant, is manageable--that's one scenario. But if you're living in a rat-infested falling-down home on the bad side of town, that's another.
Sorry for the lack of a definitive answer. Still, I hope that helps.
The first question I would ask you would be where is this condo, what community? The second question would have to be is this a condo conversion property (formerly an apartment complex)? With those answers I can provide you with some professional advice.
If your condo was part of a conversion you may have lost more value than you suspect. If not, then you are definitely in better standing. If you are planning to sell in this market you will have to understand that this will be a short sale, either you or the bank will eat the difference, and what the repercussions of that will be.
I will await your response so I can provide you the best advice possible.
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