wow! these other agents are clueless!!! Look, tempe town lake is nice, but is being waaaay overbuilt. I am hoping you didn't buy northshore, I recently checked on the MLS and it seems like nothing is either selling or renting at the prices people are asking. The towers have only a small percent moving in, and the other tower will be finished in a few months, 0% sold so far...

I am sorry to say, but for now, you are screwed. Prices are in extreme trouble due to the overbuilding, and rents will be as well, for several years to come. If you can wait it out for say 10 years, you will probably be fine, but don't listen to clueless agents next time, get a real investor agent like me who doesn't sugar coat every darn thing...

Hi Ed,

The Tempe Town lake is going to be a highly desirable area for a LONNNGGG time due to the proximity to A.S.U. What I am finding is that a lot of parents now a days are buying a condo for their children to live in while attending college. They have a friend of the child live with them to pay rent and offset some of the monthly expenses and then after 4 or 5 years when the child has graduated they sell it.

I know $300 a month is a hard pill to swallow, but I think in the long run you will do well with that property.

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Ed-

To decide whether to sell today, or hold today, you have to make a prediction about the future value of the property you currently own, and compare that with the cost of owning it for the duration, versus selling it now.

$-300/month is $3600/year in losses. I advise all of my investor clients that a 3 to 5 year holding period is a minimum. Using the low end of 3 years, that's roughly $10k in losses, assuming no vacancy. You should also add in a 5% vacancy factor. And a couple percent maintenance costs, to account for the normal handy man stuff that tends to need to be done between tenants. That $10k loss per year is likely to be more like $13K per year when it's all said and done.

So for 3 years, you are looking to feed the property an additional $40K. Will the property appreciate in value by more or less than $40K 3 years from now? If you believe it will appreciate by more than $40K, you would be better off holding it. If you believe it won't appreciate by more than $40K, you would be better off selling it.

Hello, Ed. Without knowing the details of your transaction, it is difficult to answer your question. However, since we all know we are in a buyer's market, it would be best if you can afford to hold the property for awhile. In other words, if you don't have to sell, don't. if you do have to sell, and you can get our of it what you put into it then you could cut your losses and run. I still think I would wait though. Good luck.

Richard Dobbles

Just Closed? You paid $350,000 for that area. Of course I would like to know your exact property, however it sounds like a "decent " price for a 2 bed / 2 bath.
I am a big fan of Tempe Town Lake, In my opinion that area could be about 3 to 5% from bottom, If you can afford to hold on to it, hold on.
Now If you could sell it for what you paid, and only you know that, and it is fiscally better for you, than do it.

Or wait for the market to pick up? Two years? $7,200 out of pocket or 5% total increase =$17,500

Good Luck
Patrick

Wow Ed. Sounded like a little more due diligence on your investment was in order. You didn't know before close that youd be negative cash flow?

You had closing costs on the purchase, and you'll have closing costs on the sale. You're in a declining market with increasing inventories. What makes you think you can sell it now for what you paid for it (plus expenses?)

That area has some nice condos. Too nice likely to appeal to the college market. The rental base for those kinds of condos in that area is pretty small. Is that -$300 just rent - mortgage, or you factored in maintenance, HOAs, misc expenses, prop mgmt fees, etc?