Lets see if I can boil this down to the basics;
I own a condo that I moved out of and turned it into a rental/investment property. When I bought right before the housing crash it was valued at $240k...I currently owe about ~180k on it. I do have a tenant to help defray the costs but after mortgage and condo fees I still end up about $400/mo in the negative on the property, without the tenant my expenses are close to $2,000/mo. This is in addition to any expenses that may be needed to keep the tenant happy(we just had to replace the refrigerator). Also, the complex is under some disrepair so we do have the occasional special assessment that I can't plan for.
On the surface it would make since to sell now, but here is the rub that's holding me back. The condo association is in talks with a major developer to buy out the condo association at well above market value in order to redevelop the land. This would give me a buyout option of ~330k in 2019 netting me a very nice profit on the deal. There has already been a significant amount of investment in this plan to include rezoning, traffic studies, getting the county master plan amended...and the value of the land is high enough that I'm assuming that the risk on the deal is fairly low even if the timing may change.
Based on that redevelopment plan other units in the complex have sold at above market value. I estimate that if I sold now I could list it for ~300k. So the question is should I sell it now or wait for a bigger lump sum?
Other relevant info; We have a 120k @4.8% mortgage on our primary home that we are currently living in
We have about 160k in student loans that are currently deferred and we are not making payments on.
Our original plan was to wait and sell the condo in 2019 and use the lump sum to pay off student loans in full. However, I figure it's worth reevaluating if that is still the best course of action.
So here are my options:
A. Hold on to the condo until redevelopment; ~$500/mo fixed expenses for 3 years + ~$3,000 in maintenance/special assessments/other expenses to continue to rent it out (~20k total in expenses). Sell the condo in 2019 for ~330k which if you count in the additional equity would result in a ~170k lump sum for a ~150k profit.
B. Sell now resulting in ~120k profit. Use that to pay off the mortgage on the house we are currently living in. What makes this option interesting is that in addition to the 17k in interest I would be saving we would also have ~1,600/mo that we could then redirect to paying down the student loans.
C. Something else? I'm honestly not even sure I factored everything into the equation.
Submitted December 13, 2016 at 11:28PM by darwinn69 http://ift.tt/2hCfA6g personalfinance
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