We have a rental unit in North SJ area, where the tenants recently moved out. To get new tenants, looks like we need to repaint and spruce up the place a little.
Given the RE market stalling, we’re debating whether to sell the place now or keep renting out. If we sell now, we’ll have some nice gains, but subject to capital gains. The market for condos / THs are horribly a buyer’s market however. This is likely a covid19 effect.
I’m sick of maintaining the place, so if we rent it out again, we plan on hiring a property manager. But with decreasing rent, having 8-10% prop management fee may make it under water.
Any thoughts? The thing that’s really preventing me from selling is, if we leave Bay Area, I wanted to keep that rental in case we ever want to come back. But even if we do come back, we probably want to move to the city, so it’s really just parking money in the property.
Decision to sell is always easy so long as you are selling it above your purchase price + carrying cost (financial + emotional cost) and if you do not anticipate to get better selling price in future.
What’s the price range for selling and renting? IMO, certain price range will still be strong in the upcoming years. Also, another question is what you want to do with the equity coming out and what return that can bring.
Read between the line. If he leaves, he plans to sell his Primary in Alameda and keep the NSJ rental. For whatever reason, he didn’t want to rent out his Primary if he leaves.
Since you are ultra bullish about stocks, you should recommend sell and put into stocks. PM him your choice of stocks, cc me.
There is no such a thing as a universal stock list. Each person needs a tailored made one to suit their own particular temperament.
I don’t think @notabene lives in Alameda. Last time I heard they bought in MV, right? That’s the thing though. That NSJ place must be their starter house. I don’t think they will ever be happy living there again. So even if they leave and later come back they won’t stay in that NSJ house for too long.
Property management doses not maintain the place.
They just hire over priced maintenance people that take kick backs and over charge you. Maintenance is a huge profit center for property managers
Another thing is how far away from Bay Area are you going. If going not to far away ( to a place like Sacramento or Fresno) to cause complete detachment from bay area economy and culture , then the property can be rented out without making a big hole in the pocket. That might not be a bad idea. If going too far away like more than 6 hours of driving, then sell and take your chances with the prices in Bay Area, should you ever want to return again.
Cost of operation. Account for them in your analysis. If you always have to worry that your contractors/ partners/ subordinates don’t do their best, you are not in the big league.
North San Jose is not expensive by Bayarea standards. so you can sell it and buy updated property in same area. Sure you will pay some tax but but it will free up alot of equity to buy another property in same area with cheaper debt and updated depreciation cycle.
It’s under 1M, and ~20% lower than ATH, so I think there’s still upside. Rent currently covers about 110% of PITI so I can take occasional turn over + maintenance. If I get a prop management (which runs about 8~10% of rent - is that correct?), that puts things slightly under water, esp with recent decrease in rents.
I wish if this was easy. Recent events in US puts me very bearish on SV economy + living in US in general. What a shit show…
Primary was purchased much more recently, so its cap rate is horrible. We’ll be bleeding negative cash flow quite significantly, which doesn’t make sense esp if we’re heading into longer term recession.
Correct. If we’re not planning on living in that NSJ home (ergo be able to take advantage of low tax base), there’s probably a similar investment strategy to park $$$, so in case we do come back to BA, we can just buy the next place in SF or some place.
I like to think that I still have 15~20 yrs to work, maybe 10~15 yrs as a W2 employee. So I’d like the option to be able to come back in a few years if things change.
We’re thinking Asia. Being close to family has its upside esp with elderly parents.
I am just the opposite. I suspect the US is about to hit bottom this year and starts healing next year. I am turning more and more bearish on the Chinese speaking part of Asia. Have to admit I am colored by my politics though. Maybe give it another 12 months to see how it goes? Leaving now, to me, feels like selling at the March bottom.
Sympathize with notabene’s assesment of the state of things and glad not to be there. I also sold a lot of stock at bottom for peace of mind and now planning to do an exchange. But for someone in the area, it would be a lot easier to just spruce up the condo and continue with it. Moving into a rental saves tax but will it make sense in the years to come if family circumstances change? There is also recaptured depreciation, as I’m reading here:
and now planning to do an exchange. But for someone in the area, it would be a lot easier to just spruce up the condo and continue with it. Moving into a rental saves tax but will it make sense in the years to come if family circumstances change? There is also recaptured depreciation, as I’m reading here: