Should I sell my condo or not?

[pf39]

Hello everyone

I am new to this forum, but I sure need you help. I own a 2 bedroom, 2 bathroom condo, in Lorton VA, zip: 22079 that I bought in 2004 for $250. The appraised value for the condo as of 3/2007 is $304. I am thinking of buying a townhouse and renting this condo and keep it as an investment. However, given the market condition right now, I am afraid that the condo will loose value as time goes on.

My question is, should I sell the condo now, and use the equity to buy a townhouse or just ignore the market crises for now and rent the condo with expectation that the equity will increase probably in the coming two years? I please help me make the right decision. Thank you and I look forward to your response.

pf39

[Honeycomb Properties]

Let me check my crystal ball...

It's almost impossible to forecast exactly where the market is headed. Those that take risks and guess correctly can reap strong rewards, but again there is always risk. To continue with the risk theme- have you ever rented property before? Have you figured out the cash flow for the property (including vacancy rate), do you have a way to investigate potential renters, etc. Renting can be profitable, but also comes with substantial risks- renters damage the property and devalue it, nonpayment, eviction, are just some of the basics.

The choice is yours, but if you can make a profit selling in the current market, that is where I would lean (your appraisal is 6months old and our current mortgage woes have surfaced during that time). I firmly believe the mortgage woes that have recently come to light and negatively effected the real estate market aren't going away anytime soon. I'm guessing we have at least 3-5years of mortgage troubles ahead of us.

P.S. Real Estate is very geographically specific and I am in Indiana- contact a couple of local Realtors and get their advice (keep in mind, they will likely emphasize that you to sell so they can make $$), that way if you do decide to sell you have done some research on who you will have help you.

[Mike Taylor]

Like James said, without knowing your market conditions it is tough to say. However, I believe if you can hold onto this condo for the long run it is always better to keep real estate. As long as you are not in a position where you have to sell it at any time, why not hold onto it? It might take a few years, but the market will pick back up again. In the meantime, you have someone paying your mortgage for you.
I currently own 3 homes in Florida, and am not even considering selling one of them. Why? Because when I bought them, I knew I was in it for long haul. I have already done very well on them, so now I ride out this storm and let my renters pay the mortgage off until the market picks back up and I start seeing more appreciation.

[Greg]

1. Real estate is a long term investment. The historical cycle goes up and down every 7-10 years. If you hold onto your condo for another 10 years you will be bragging about how cheap it was when you bought it.

2. Real estate is an acquisition investment. This means the goal is to accumulate as much of it as you can. Eventually it will start to pay for itself and you will have a nest egg that is not only producing cash flow but you can borrow against it or liquidate.

[gjtrafl]

To continue on with the points above...

1. Condos are usually (not always) the first type of housing to drop in value when market conditions drop. This can happen due to overbuilding and the fact that you don't own real "land".

2. If you decided to sell in the short term (within 2-3 years), I would tell you not to hold on to it.

3. As stated above, the long term hold would be the way to go.

4. Your "near" future is probably not nearly as bright as your past has been.

[Home-Flip.com]

There are many aspects you need to look at when renting a property. You should find out how many condos/ townhouses/ houses are for rent in the area. What is the rent going for on them? Will it pay your mortgage, taxes and Ins (if you have it). Will the rent be able to cover your costs? And if not, how much will you be paying out of your pocket? Can you afford it?

The reason why I ask is because the rental/for sale market in Florida is horrible. Everyone who needed to sell their house and couldn't placed the property for rent. So, there is an influx in rental properties here. With all of the houses/ condos/ townhouses for rent in my area, people were lowering the rent so low that they were coming out of there pocket as much as half.

I own 2 rental properties in Port St. Lucie, FL. When we decided to move back to Fort Lauderdale we had to place our current residence up for rent. We were scared because many houses had been sitting on the market for as long as 6 months!! Luckily for us, we rented our house in 2 weeks. We do come out of our pocket with $300 a month.

We would have sold the properties if the market was different. But for now we are stuck with them for the next 2 - 5 years.