The builders decided to make half of them condos and the other half are luxury aprtaments that can be leased for one or two years.
Right now people are having a really hard time selling the condos that they bought as around the general area there are a lot of new condos being built or ones like in this situation are being sold. After 2 plus years of living in them people are maybe getting what they paid for them but not much of a profit. A lot or trying to go FSBO or leasing them out.
Right now I owe 144k left on it and and in the 3rd yr of the 3 yr arm (ends in Oct 06). I am paying a total of $1078 a month. I will be getting married in June 06 and we will want to move out of the condo, and buy a house. My plan is to rent out the condo. Now the good thing is that my exact condo leases out for $1095 for 2 years and $1230 or so for a 2 year lease, so I have that to compete with. One good thing is that I am right across the steet from the clubhouse so it will get lots of visability. My dues are $130 a month which I will have to cover when if I do rent the place out (are dues on investment properties tax deduct?)
So to compete with the apartments I will have to get down to $900 a month my mortgage. I plan on dropping another $1500 into the principal of the condo before I refi so will be looking at $142 or so. I will still owe the PMI.
So should I hold off on refi until I get more of the principal out of the way after the wedding in June, or do it before the March 28th. I am thinking I may have to go with interest only to make sure I cover the expenses and just throw any extra mony into the principal when I get the chance.
If you do not have a pre-payment penalty and you are quite sure that you want to rent this property out do it ASAP. Rates are likely to start getting squirley(sp?) in march.
As far as I remember there has been 14 consecutive fed interest rate hikes in a row, doesn’t sound like they will be slowing anytime soon. I’d be thinking about locking in a low fixed rate soon. Also, sounds like you might be running negative cash flow on this thing, can you afford to keep making payments if its taking a few hundred out of your pocket every month?
I’m having a similar situation with my condo. I live in Chesapeake, Virginia – bought it brand new in Feb. '05 for $189,900. 2 bedrooms, 2 baths about 1350 sq. ft.
Problem is … can’t sell it. Can’t even get an offer on it. Our asking price (212K) is lower than what the last model sold for in July of last year. The listing expired, now I’m wondering if we should just rent it out. Our payments though are running about $1455 per month – which is well above what others are renting for in very similar models in the same complex, not to mention the condo fees that run $122/mo.
What’s the prevailing opinion of condos in general here? Some people hate them, and have told me to get rid of it as fast as I can. And what about the question of condo fees – are they tax deductible? What’s the best course of action?
Condo fees (or association dues) are federally tax deductable to an investor.
What I have found with condos in my area is that an updated turnkey unit will bring a far higher price than an equivilent unit that is not improved or needs some work. My units needed nothing and they sold faster and at a higher price than anything in the complex. Also, empty units sell faster than inhabited ones.
I know some people say furnished is better because people can visualize how it will look but I’m just relaying my experience.
I think I should be ok, obvioulsy I will see what my final payment will be if I choose to refi. If its tight and or I can stay even I will still probably rent it out. The one year price that the assocaition is doing would already be netting me a little cash flow. I just want to get some more equity into it.
One of your big mistakes on your mortgage is your paying PMI…that is the biggest waste of money, for you probably about $75bucks a month…Its an issue policy your mortgage co is making you pay just in case your default on the loan which your not planning on doing.
When you refi, go with a 80/20 loan, especially if your not planning on keeping the place for more than 5yrs. Do not bother with a ARM since the rates are actually higher now.
Here is here PI on fixed figuring 7.25% at 142K using one loan would be $969 a month plus about $75 a month in PMI makes it around 1044.
Going with an Interest only using 80/20 would be:
1st loan for $113,600 at 7.25% = 687
2nd loan for $28400 at 10.5% = 249
Total Interest only payment = 936 a month…
This is just an example…And you can handle the extra $100 a month, apply it to principle each month, which would be 1200 yr…on a typical fixed you would not pay off 1200 a yr in principal because of the PMI being added.
Also an option arm can be good, but you would want to buy down the penalty points just in case you sell, put it will allow you to cashflow the property and pay what you want really…just need to shop all 4 payments on it…