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In a similar situation and would also recommend selling unless you have a decent amount of control with your condo board.
If going the rental route, I would do a refi-cash out and use that cash as a down payment for your next place rather than taking out a line of credit. You should be able to get a lower rate with a mortgage.
This is what I was going to recommend.
Your new mortgagee will then have to underwrite both properties so will prob build in a fee to your rate to cover that. Keep it clean and take out a new condo mortgage that your renter will pay down over 30 years.
Prior mortgage manager and heloc underwriter here.
I have four rental properties, but no experience with condos.
From the loan stand point, Do Not do a line of credit. Do, do a Cash Refinance.
Also, interest rates are down and will get lower early next year. So, it is a good time.
Depending on if you will need the disposable cash from the monthly rent, you could always hire/use a management service.
Not a bad idea as leverage is what can make investment properties lucrative.
Just make sure you can swing all the debt payments if you have a break in rental income for some reason.
Crunch the numbers on renting the condo with and without a loan to see what kind of returns you can get and decide from there.
Another consideration is how much equity you have in the condo. Selling it now will allow you to avoid capital gains taxes.
Not a condo, a small house though. Feels very worth it to hold onto a house in a good market (Denver) when we could afford the down payment and larger mortgage on an upgrade. We’ll likely keep doing that every 5 or so years. In this market it feels silly to sell it when you can keep it and it increases in value. Though I don’t know enough about the DFW market to say one way or the other there.
I will also say - not worth managing yourself. Make sure it still feels worth it when you pay someone else to manage it for you.
Did this in Atlanta. Worked beautifully. Be sure to look at tax implications when you sell condo. If you didn’t live there long enough or if you wait too long to sell proceeds will be taxed as income. If you don’t plan to sell condo and just keep it as investment property there are tax implications to that also. Just be sure you’ve done your research and good luck
I did this with my condo. I have a nice condo in an up-and-coming area. It has nicely appreciated over the years and been very easy to keep tenants in with increasing rent. I’ve actually paid it off again since I put all the extra rent money back towards the mortgage payment. I am now considering whether or not to do a 1031 exchange to swap it for a larger condo/townhouse - and rent that out.
It really depends on how good of an investment asset you think your condo is. Is it a good property in a good area? Do you think it will appreciate? Will it be easy to rent?
Yeah, it’s in a nice part of Dallas that is part of the Plano west school district. It’s right in between the major highways to north or south. Most people are renting out their condos in that area now—we could get 2k on rent easy which would cover all the costs (HOA, taxes, loan, etc). That’s why I’m having a hard time selling it. It’s supposed to appreciate
No
Tell me more about your experience
PwC 2 makes some good points...that could be a whole separate conversation.
Def do research on how you could be taxed.
Thanks everyone for your insight!
Met with a loan officer to get approved for the mortgage on the lot we are working to build on with a builder. They said we could rent or sell and be perfectly ok. I think what I’m nervous about is maintaining the tenants. I’ve heard horror stories about tenants, but I’d hope that would be a fraction of the population. Those that have rented, what have you found to be successful characteristics of renters?