Rent or sell my condo at a loss?
March 31, 2014 2:23 PM Subscribe
Should I sell my condo at a loss to make a fresh start on a new place with my partner? (I am using a sockpuppet, because this question contains personal financial info that I don’t want linked to my primary --and identifiable -- account and I may need to answer follow-up questions.)
posted by myorangesocks to Work & Money (18 answers total) 1 user marked this as a favorite
I own a condo – its worth about $255,000 (maybe a bit more, but not much) and I have about $27,000 in equity. I originally put down $20,000.
My partner and I would like to move in together and I am wondering if should sell my condo now and use the money to buy a new house together or rent my place out for a few years.
My partner can afford to buy a new place without my contribution to the down payment, so my renting it out is an option. If I rented my condo, in a few years I could sell it and then apply the (greater I hope) profit to the equity of our new place.
If I sell now, I won’t break even. The real estate fees on my sale will be about $13,000 (2.5% for each agent) give or take. That’s only $14,000 remaining.
But even with that, I think it still might make more sense to sell. This is where I need help to figure out the best course of action. Reason being: my mortgage and fees are about $1650 a month, but units like mine in my area only rent for about $1500.
So if I rent it, I’d be out of pocket each month. Not to mention I’d have to set aside money for repairs, eventual appliance replacement and the possibility that the unit will be vacant at some points. Everything I have read says this would be a very bad move.
Also, even if I keep it -- as it will not be my primary residence -- I will have to pay capital gains taxes (I am in Canada) once I do sell, which will also reduce any potential profit down the line. If I sell now, there will be no capital gains to pay.
My question: Does it just make sense to take the $14,000 I might get now and put that into a new place with my partner? It feels wrong in way, as I’ll be coming out with less than I went in.
But my gut says, I would be paying a mortgage on the new place we buy – and so I would continue to build up equity in the new place. I just have to take a bit of a hit in the short-term.
My question: does it make more sense to sell it or rent it?