I would suggest renting the townhome if you could come close to breaking even. This would allow you to take advantage of the current low home prices and purchase another home with payments that you can afford. Moreover, you would still be able to maintain your good credit score.
Harold Avent, CDPE, CRS, CRB, e-PRO
REMAX Execs South Bay
I like Shel-lee's response. The townhome's shift in value is temporary, like the stock market. Be careful what you do with your credit. That can have LONG TERM consequences.
There are more people looking to rent (where do you think all those folks that used to live in a home that now is either foreclosed or was sold via a short sale are living?) so the rental market is strong. Check the HOA CC & Rs for restrictions on non-owner occupied unit rules.
If you are thinking of buying before you do anything else:
1. Check with a lender on how you might qualify for a loan if you keep it as a rental
2. if you have never owned rental property consult your CPA for after tax consequences. There are short and long term consequences that may affect you down the road.
I'm not sure that I understand your question...you bought a new townhome in 2006 and your incomes have doubled, but you say you are upside down in the property...do you mean that you owe more than the market value, or just that the market value isn't as much as when you purchased it. The other question I have is do you need to sell or are you just concerned since values have come down?
One thing you can do is call your local tax collector and see if you can get an adjustment on your taxes. If your value has dropped you should be able to lower your tax basis.
If you don't have to sell, then perhaps the best thing to do is stay where you are and continue to enjoy your Townhome. If you are in a position where you must sell, then you might want to explore renting it out instead of selling.
Talk to a local realtor to get a clearer picture of your options...I have a great referral for you if you are interested.
Since 1988 I have been assisting clients like yourself. I'm a licensed appraiser also so let me know your address and I'll present several options for you to consider.....
David Krecker, BSBA, SRA, MRA
Centuryside Real Estate Inc.
Broker/Owner/State License Appraiser
Serving the areas of Orange County, Los Angeles County, San Bernardino, and Riverside.
Congratulations on the doubled income and take comfort in knowing that you are not alone in being upside down on your townhome.
The good news is that you do have options. Holding the townhome and renting it out may certainly be one route. Selling it and negotiating a short sale with your current lender is another. Most importantly, you need to make an informed decision and be comfortable with the financial implications of taking either of those paths.
Feel welcome to contact me. I'd be happy to help.
South Bay Brokers, Inc.
Of course you have options and I would love to discuss them with you. Here are some examples:
1. Rent out your current property and buy something new. If you use FHA financing, they accept 90% of the rental income for qualifying purposes.
2. If you are moving out of the area you could qualify for a short sale. Out of area moves are considered a hardship.
3. If we put our heads together I am sure we can come up with other ideas.
You can contact me directly through my profile. My office is in Torrance on Hawthorne. Let's look at the options. Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes / Execs