If your rate is fixed, rents cover the payment and your don't forsee any major out of pocket expenses over the next 5 years...Hang on to it! We aren't building more land, values will recover over time, real estate has always proven to be a great long term investment.

Laura,
Do you have a fixed interest rate? If you are able to hold on to your home for up to five more years, you have a good chance of getting the most out of your real estate investment. As long as your rent covers your mortgage, I recommend waiting out the down market. Remember, buy low and sell high :)
Kenzie

Doom and gloom makes headlines. Rates are low, and prices have dropped. If you're buying for a long term investment, locking in today's rates will make good investment sense for decades.

Prices going down another 18% this year.

Kirkland is a fairly stable market. The stock market is not stable. The bond market is not stable. Bank savings rates are ok, but not great. Stick with the real estate. You'll pay 1.8% excise tax plus commissions when you sell, which would wipe out a lot of gains from an alternate investment.

Laura,

Without knowing more about your other investments, diversification, or your financial priorities, it is difficult to be specific.

I recommend that you contact 3 Realtors to do market analyses on your property to establish a reasonable expectaion of the price you could realize. Then make your decision from that based on where the potential return of the other investments you are considering.

Real estate is an excellent long term investment and unless you have a need, emotional or financial, to sell, I would probably not recommend that you sell in a down market. The equity you have lost recently will return eventually.

Laura
You ask a question that it on many people's mind these days and the answer as you can see by previous answers depends mostly on what your needs are and where you will put the money you receive. If you have lived in the home as your primary residence you currently will not have to pay capital gains on the first
250K or less that you receive (double that if you own with someone else or are married). You need to have lived in your house 2 out of the past 5 years as your primary residence. A benefit of selling now is that you
don't lose this money if that rule should be changed by Congress. Prices are certainly lower than a couple of years ago but properties that have been maintained and showcased are selling better in the Kirkland/Rose Hill areas than in some other areas. First time buyers get a $7500 tax credit for purchasing and a bill is before Congress increasing this to 15K and to open up to all buyers. Interest rates are at an all time low.
There are lots of buyers looking to get into this marketplace where for their personal residence or for investment.

I sold a condo I owned 6 months ago and thought I got a fair but reduced price but since the price on these properties has dropped further and I am glad I sold when I did.

As Karen mentions if you intend to invest your money somewhere else it is best that you talk to a financial advisor. I believe as she and many others do that real estate is one of the best investments out there.

Some sellers are taking advantage of this market by selling what they currently own and buying up at a reduced price and in this case as long as you buy the same kind of property (rental to rental) you can defer your gains with a 1031 tax exchange. I can refer you to someone that specializes in 1031 exchanges,
Bill Townsend at Starker Exchanges in Bellevue. I have worked with them many times. There are tax exchanges that are available that provide a steady income with little or no risk and absoluetely no maintainence for the seller.

I would choose a couple of agents and talk to them personally.

I have been in the business for 30 years and resided in downtown Kirkland for the past 20 years.

Dear Laura,

There is no better investment than real estate. You are getting your yield on the money you put down. What many people do not understand about the total beauty of real estate, is the leverage you get. You simply cannot ever get the kind of yield in the stock market that you can get in real estate - unless of course you bought something like Amazon in 1998 and sold it at just the right time. That's a rarity.

If the rent is covering your costs and you have no need to access the equity, why would you sell? Real estate has cycles, but they tend to be 7 - 10 years. Statistics are showing California and Florida have already hit bottom. What we know is your property will go up in value again. The Seattle area is one of the areas in our country that will be what we call a Megalopolis. We will not know when the market is appreciating again until inventory decreases to the point that supply is lower than demand and we start seeing prices go up. Prices will go up much more quickly than they went down.

Now if you have a lot of equity, you might be wise to leverage that equity into another property. I work with investors and can do an analysis of the yield you are currently getting. I don't have a tool I can just send to you, I would have to put your data into my spreadsheet.

What your yield is depends on what you put down, when you bought the property, you monthy income and outgo. Please contact me if you would like more details. My office is right at the corner of 132nd Av and NE 85 St.

Warmly,
Karen

Hi Laura,

I do work in the Rose Hill area and currently have a 3/2 rambler of 1620 SF listed there at $479,950. A similar one sold in the last 2 months at $510,000, but it was updated whereas mine is not. I would say the market value for a slightly smaller home, not particularly updated, would be between $399.000 and $450,000 depending on condition. I don't think the values will come back to previous levels for quite some time, so if that range is acceptable to you, you could sell now. However, I agree with some of the other advice that unless you have a better investment in mind, it would not make sense to sell when your mortgage is covered by the rent.

Laura

I'm not an expert in Rose Hill but it's historically been a great area for people to get started in the East Side market. The only reason to sell it would be to upgrade your real estate holdings. If you've got a big equity you might be able to put it into a larger home that's suffered a larger dollar decline in this market. This could set you back into a cash flow problem though. Talk with a local agent about the possibilities. Certainly, you don't want to move your money out of East Side real estate. It will come back strong and you'll be sorry.

If you don't have to sell it and you are comfortable renting it out hold on to it. I think you need to look at real estate like you would any other investment. Are you diversified? If you are then this is a buyers market and not a good time to let go of real estate in my opinion.

Hi Laura -

If it were my home and I did not need the money from the equity right away, I would wait. If you sell right now and take a lower price, where would you put the money? Any Money market account is not paying very much, and when we come out of this recession, things will change and interest rates will be higher. Hopefully not too much higher. In the mean time. you have the income from a rental making payments, and I do not think this recession will last for very long. Not like the previous ones.

Laura

Hi Laura,

The Kirkland market hasn't been hit as hard as other areas in WA, but we are still down from 3 years ago. Currently we are seeing about a 16% depreciation. It's a tough questions to sell or hold. If you have lived in the home 2 out of the previous 5 years, you would be looking at capitol gains savings if you sold.

I would be happy to work up a market analysis for you to give you a good idea of what your home would sell for in todays market if you are interested. All I would need is the address of the home in question, current condition of your home and any additional information that may be helpful (garages, carports, upgrades, additions etc..). At least then you have the information.

Please feel free to contact me if you have any questions.

Sincerely,

Leslie Goulden -Windermere Kirkland
425-503-8862

Depends on some of the variables that are in front of you. What is your other investment options that you're considering? What is your investment goal? Rentals are, by nature, more for long term capital gain. If you can cash flow positively each month...then that's icing on the cake. What are you into the house for? ...meaning..how much equity do you potentially have to invest elsewhere?

Real estate market is cyclical. A lot of money was made in the years after the Great Depression (so I read). If you're not in need of the equity, it becomes a basic comparison in investment strategies and your goals. If you're looking to turn your investments over every few years...rental properties is probably not your best bet. Just comes down to what your other options are.

Me personally...my goal is to generate enough passive income to cover my current living costs...that would then free me up to pursue other business ventures or plans without having to worry about paying the bills. If I was more interested in generating capital ...then flipping homes or rehab homes is an option ... or maybe the stock market. All depends on your individual goal.

Laura, no one can tell you what the market will do more than about 2 months in the future, so don't listen to those who claim they can.

I would question though what other asset you think will earn a decent return. Most things that are safe pay very little. So to me it's really a matter of do you want to go to safety, not to something with a higher return.