• filter:
  • Page :
  • 1
  • Text Only
  • Search this Topic »
Voting History
rated:
Hi all,

I've been a long time lurker here in finance. Have a question to all you knowledgeable members: 

I'm contemplating selling my condo, its a 1 bedroom in San Jose, CA - Santana Row area, for anybody familiar with Bay Area. Should I do it or wait another year? What do you guys think?

My general plan is to give my long time tenant a 60 day notice in November, giving him enough time to vacate, before February. Then, in February next year when market picks up, do some remodeling to it, paint, floor, kitchen cabs, bath updates, and try to sell it. I've owned it for 10 years now, was underwater for long time, and now I'm in position to make something off of it. 

Even though the area where it is is nice, and I would love to live there myself one day, the HOA is killing me with almost 500 a month of useless fees for nothing, only garbage pickup is what services I get. I'm paying $1000 a month to have tenant live in there, after rent. Its OK when prices keep rising, but I'm getting concerned it wont be forever. So is it a time to sell? I never done this before, first time condo, so that's why I want to get some advice here. 

Thank you all!

Member Summary
Most Recent Posts
I'm a real estate investor in Santa Rosa but my father lives only 2 miles from Santana Row so I'm familiar with the area... (more)

antiandrewling (Oct. 09, 2016 @ 5:39a) |

OP never said he/she had rented it for more than 2 years of the last 5, so we don't know about cap gains tax.

the $.80 es... (more)

solarUS (Oct. 10, 2016 @ 7:27a) |

I'm going to repeat what I said before. Ask the tenant if they want to purchase it as is. Your lease or even local laws ... (more)

taylor0987 (Oct. 10, 2016 @ 9:08a) |

Staff Summary
Thanks for visiting FatWallet.com. Join for free to remove this ad.

rated:
You should probably sell it. You're bleeding $12k a year speculating on real estate in a volatile area.

Might be relevant to know more about the financials: What is the property worth? What do you owe?

rated:
I would see if the tenant is interested in purchasing it.

rated:
Something seems out of place enough to justify selling. I think you either don't understand what the HOA pays for or have been negligent for too long in not getting its excessive fees changed.

rated:
drunknmunly said:   Hi all,

I've been a long time lurker here in finance. Have a question to all you knowledgeable members: 

I'm contemplating selling my condo, its a 1 bedroom in San Jose, CA - Santana Row area, for anybody familiar with Bay Area. Should I do it or wait another year? What do you guys think?

My general plan is to give my long time tenant a 60 day notice in November, giving him enough time to vacate, before February. Then, in February next year when market picks up, do some remodeling to it, paint, floor, kitchen cabs, bath updates, and try to sell it. I've owned it for 10 years now, was underwater for long time, and now I'm in position to make something off of it. 

Even though the area where it is is nice, and I would love to live there myself one day, the HOA is killing me with almost 500 a month of useless fees for nothing, only garbage pickup is what services I get. I'm paying $1000 a month to have tenant live in there, after rent. Its OK when prices keep rising, but I'm getting concerned it wont be forever. So is it a time to sell? I never done this before, first time condo, so that's why I want to get some advice here. 

Thank you all!
 

  
Cliffs in bold.  Sell the condo now and do not wait a minute longer.  What's going to change between now and then other than you spending another $12k and adding another $x to your taxable income from rent?  You can write off the loss, but why keep blowing money on a condo you probably don't want or need.

Sell the condo before this becomes a 15 page thread with unrealistic scenarios of you making $$$$$ if you keep it another year.  You won't. 

rated:
damn, op
Santana Row Real Estate
Address Location Price
2864 Hemlock Ave SAN JOSE $1,350,000
334 Santana Row #209 SAN JOSE $619,000
334 Santana Row #239 SAN JOSE $620,000
Average for Santana Row: $1,198,000

rated:
drunknmunly said:   I'm paying $1000 a month to have tenant live in there, after rent.
 

is that including mortgage principal paydown? makes a big difference.

please provide a breakdown of the financials.

rated:
Wow, it's hard to make good money off a $800k one bedroom rental, unless you can get $6k a month rent for it.
If you can get anywhere near 800k for yours, sell, sell, sell.
Is February a good month to sell, or are you better off timing it for a peak pricing month?
http://www.zillow.com/homedetails/333-Santana-Row-APT-225-San-Jo...

rated:
solarUS said:   
drunknmunly said:   I'm paying $1000 a month to have tenant live in there, after rent.
is that including mortgage principal paydown? makes a big difference.

please provide a breakdown of the financials.

  The breakdown here is that mortgage payment is 2400, HOA is 500, Taxes are 800, rent is only 2100. So I'm saying 1000 very optimistically with tax write off/principal included included in my calculations. The condo is nearing 550 - 600 range that's why I'm trying to figure out if its worth it to sell. I was underwater for a Long time until prices started climbing up to 500. I will need some time to get it sale ready. 

The question remains, do I hope for more, for prices to keep climbing up? But it seems like it can't be going much more than 12K a year in next few years or can it? 
 

rated:
Did somebody say a bubble? I say sell, man.

rated:
Dump it. That is a lot of money that could disappear very quickly.

The fact that you are taking a net loss each year (excluding expenses and tax write-offs) is also very troubling.

rated:
SELL. I would because i believe we are overdue for a real estate market correction. Who could afford an afford $1 million or $2 million houses or a $600K condo in CA? Dont hold me to it but I think after the election, next year the real estate price will drop. 

rated:
Sell, homeless people are taking over San Jose and when interest rates rise that place falls rapidly in value.

rated:
Bleeding $1000 a month would just kill me, even if I could afford it.  I literally couldn't sleep at night.

Sell Mortimer, Sell!

rated:
drunknmunly said:     The breakdown here is that mortgage payment is 2400, HOA is 500, Taxes are 800, rent is only 2100.
 

wut. that may be one of the worst FMV rental returns i've ever seen, when the property value is pushing 600k.

do you really want to move back into this 1BR condo in the future? unless you REALLY want to live there (and pay that high COA and high taxes), then this is an easy decision.

rated:
Since your renting it, the $500 a month is tax deductible as an expense. Not sure of your income but I imagine considering depreciation, HOA fees etc you might actually be making money when fed and CA taxes are considered.

rated:
bopc1996 said:   Since your renting it, the $500 a month is tax deductible as an expense. Not sure of your income but I imagine considering depreciation, HOA fees etc you might actually be making money when fed and CA taxes are considered.
except, if OP is making a normal CA salary, then he/she can't deduct anything because of the income cap on passive RE activities. at most it'd be break-even. 

rated:
Is it rent stabilized or something? That is a terrible rental yield .

rated:
TravelerMSY said:   Is it rent stabilized or something? That is a terrible rental yield .

The price to rent ratio in California is insane because 1) there are a lot of speculators in the market buying up homes thinking they only go up in price. 2) Prop 13 creates an incentive to never sell a home because property taxes get capped
   

rated:
brettdoyle said:   
TravelerMSY said:   Is it rent stabilized or something? That is a terrible rental yield .

The price to rent ratio in California is insane because 1) there are a lot of speculators in the market buying up homes thinking they only go up in price. 2) Prop 13 creates an incentive to never sell a home because property taxes get capped
   

but in places where rent isn't subsidized or controlled unnaturally, this all usually leads to really high rents. why hasn't that happened in OP's area?

i could spend less than $200k in my city and get $2100/mo, all day long. hell i just bought a place for under $80k that gets $1850.

rated:
solarUS said:   
brettdoyle said:   
TravelerMSY said:   Is it rent stabilized or something? That is a terrible rental yield .

The price to rent ratio in California is insane because 1) there are a lot of speculators in the market buying up homes thinking they only go up in price. 2) Prop 13 creates an incentive to never sell a home because property taxes get capped
   

but in places where rent isn't subsidized or controlled unnaturally, this all usually leads to really high rents. why hasn't that happened in OP's area?

i could spend less than $200k in my city and get $2100/mo, all day long. hell i just bought a place for under $80k that gets $1850.

 Boston is the same. My old condo is listed at $650K purchase price and $2600/mo rent for that unit.

rated:
In the expensive markets people are investing in appreciation not rent yield.

OP has likely made more return (on paper) including appreciation in the past 3 years than most in a market with rent that is >1% of property value. Of course its only on paper and its just speculating on a volatile 'hot' real estate market. But thats how its done in places like that.

rated:
solarUS said:   
brettdoyle said:   
TravelerMSY said:   Is it rent stabilized or something? That is a terrible rental yield .

The price to rent ratio in California is insane because 1) there are a lot of speculators in the market buying up homes thinking they only go up in price. 2) Prop 13 creates an incentive to never sell a home because property taxes get capped
   

but in places where rent isn't subsidized or controlled unnaturally, this all usually leads to really high rents. why hasn't that happened in OP's area?

i could spend less than $200k in my city and get $2100/mo, all day long. hell i just bought a place for under $80k that gets $1850.

  Yeah I've been buying $100k-$120k houses and renting for $1400-$1700

rated:
Now, I really see that general consensus is to sell, and it does give me some level of confirmation that I was thinking correctly. Thank you all who replied, again - I never sold RE, so for me it has a bit of uncertainty.

As far as when selling it, do you think its worth making upgrades like quick kitchen / bathroom / floor remodel to get more money? Or will it be a wash after taxes, RE agent fees? Also any experience selling with online brokerage, like RedFin or ZipRealty? Anybody negotiated their RE agent fees to 4% in CA San Jose for 600K property ?Is that doable?

rated:
"in February next year when market picks up"

You're predicting that the housing market will go UP..?  I mean you could be right, but I kind of thought that the consensus lately has been that we're already due for another major correction.
 

rated:
drunknmunly said:   ...
As far as when selling it, do you think its worth making upgrades like quick kitchen / bathroom / floor remodel to get more money? ...

  
I think that would depend on the current state of the condo and the local market.

Your realtor should help answer that.

 

rated:
I'm i a similar situation. My question is where you would put that money once you sell?

rated:
Lugs said:   "in February next year when market picks up"

You're predicting that the housing market will go UP..?  I mean you could be right, but I kind of thought that the consensus lately has been that we're already due for another major correction.

  In my experience, when everyone thinks we've hit the bubble top, wait 1 year and then sell. Momentum carries bubbles further than a rational person might think.

rated:
BostonOne said:     In my experience, when everyone thinks we've hit the bubble top, wait 1 year and then sell. Momentum carries bubbles further than a rational person might think.
 

  
"Markets can remain irrational longer than you can remain solvent while betting against irrationality"

rated:
drunknmunly said:   Now, I really see that general consensus is to sell, and it does give me some level of confirmation that I was thinking correctly. Thank you all who replied, again - I never sold RE, so for me it has a bit of uncertainty.

As far as when selling it, do you think its worth making upgrades like quick kitchen / bathroom / floor remodel to get more money? Or will it be a wash after taxes, RE agent fees? Also any experience selling with online brokerage, like RedFin or ZipRealty? Anybody negotiated their RE agent fees to 4% in CA San Jose for 600K property ?Is that doable?

  
The best housing upgrades typically pay around 80 cents on the dollar and then you'll have to pay 6% realtor closing costs plus capital gains tax... so every dollar you spend remodeling will give you back something like 50-70 cents on the dollar.

 

rated:
drunknmunly said:   Now, I really see that general consensus is to sell, and it does give me some level of confirmation that I was thinking correctly. Thank you all who replied, again - I never sold RE, so for me it has a bit of uncertainty.

As far as when selling it, do you think its worth making upgrades like quick kitchen / bathroom / floor remodel to get more money? Or will it be a wash after taxes, RE agent fees? Also any experience selling with online brokerage, like RedFin or ZipRealty? Anybody negotiated their RE agent fees to 4% in CA San Jose for 600K property ?Is that doable?

  
The only "upgrade" likely to "pay out" is a fresh coat of paint.  In the price range you are in that is more certain.  Just have it professionally sprayed with whatever color it already is - so you won't need to deal with underlayers/sealing/tinting.  (unless its a really bad color somewhere)

rated:
I'm a real estate investor in Santa Rosa but my father lives only 2 miles from Santana Row so I'm familiar with the area.  From an investment point of view a Santana Row condo is like owning a highly speculative stock that pays no dividends.  Much like with stocks I would advise people to leave such investments to the experts.  However with real estate you have a disincentive to sell namely realtor's commissions and possibly lower property tax basis if the property has gone up.  If you sell the place what would you do with the funds?  If you are going to buy properties with a higher cap rate e.g. houses in Santa Rosa for $400K that rent for $2300/month by all means sell.  But if you have no alternative real estate investment you are losing out on a low interest rate loan.  Feel free to PM me I enjoy talking about investing.

rated:
brettdoyle said:   
drunknmunly said:   Now, I really see that general consensus is to sell, and it does give me some level of confirmation that I was thinking correctly. Thank you all who replied, again - I never sold RE, so for me it has a bit of uncertainty.

As far as when selling it, do you think its worth making upgrades like quick kitchen / bathroom / floor remodel to get more money? Or will it be a wash after taxes, RE agent fees? Also any experience selling with online brokerage, like RedFin or ZipRealty? Anybody negotiated their RE agent fees to 4% in CA San Jose for 600K property ?Is that doable?

  
The best housing upgrades typically pay around 80 cents on the dollar and then you'll have to pay 6% realtor closing costs plus capital gains tax... so every dollar you spend remodeling will give you back something like 50-70 cents on the dollar.

 

OP never said he/she had rented it for more than 2 years of the last 5, so we don't know about cap gains tax.

the $.80 estimate is...misleading. some updates pay off much, much better because they get the place sold when it wouldnt otherwise. also, things like BAD flooring (linoleum, old carpet, etc) can be swapped out and the return is at least 100%. and naturally, almost every single REPAIR gets an ROI over 100%, so address any deferred maintenance beforehand.

knowing which tasks to take on does require experience, though, and a good idea of what is typical in one's market. unfortunately, realtors are often not capable of making good ROI assessments in cases like this. they'll suggest whatever will get it sold quick, regardless of the seller's profit.

rated:
drunknmunly said:   Now, I really see that general consensus is to sell, and it does give me some level of confirmation that I was thinking correctly. Thank you all who replied, again - I never sold RE, so for me it has a bit of uncertainty.

As far as when selling it, do you think its worth making upgrades like quick kitchen / bathroom / floor remodel to get more money? Or will it be a wash after taxes, RE agent fees? Also any experience selling with online brokerage, like RedFin or ZipRealty? Anybody negotiated their RE agent fees to 4% in CA San Jose for 600K property ?Is that doable?

  I'm going to repeat what I said before. Ask the tenant if they want to purchase it as is. Your lease or even local laws may already give the tenant first right of refusal anyway. You don't need any upgrades if they want it as-is, and you don't need to pay a real estate agent commission to make that happen.

  • Quick Reply:  Have something quick to contribute? Just reply below and you're done! hide Quick Reply
     
    Click here for full-featured reply.


Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2016