I outright own Condo #1 that I paid $95,000 for. Zillow now estimates the value at $125,000.
I own another Condo #2 in the same building that I paid $110,000 for. Zillow estimates that value at around $125,000 also.
Condo #1 has no mortgage. Total annual expenses are $4,800. Total annual rent income is $14,400.
Condo #2 has a mortgage balance of $45k at 3.5% with 7 years left. Total annual expenses (including mortgage) are $12,100. Total rent income is $13,200. Once the mortgage is paid off it will have the same annual expenses as Condo #1.
Both rentals are currently being rented at below market rate because I’ve had the same renters and I didn’t feel like raising their rates. When either condo is eventually rented again, I should be able to raise the rent by a couple hundred dollars per month. I’ve owned both units for over a decade and they’re in a desirable area and they get rented within 1-2 months of any vacancy notices. I self manage the units and I could probably chop that 1-2 month float in half if I tried a little harder in between tenants. Most of the time I have long term renters so float periods are not anything I worry about. Managing the units is trivial so there's no real stress or time overhead.
My eventual goal is to FIRE with a SWR of ~3%: for every $1M I save, I can rely on $30k per year. But these condos (once the mortgage is paid off) provide $26,500-$9,600 = $16,900 annual income. That’s the equivalent of a little more than $500k for only having around $200k of my own money invested or Zillows valuation of $250k opportunity cost. Presumably, I could raise the rates in the future and still keep the units rented easily.
I think keeping these units is a pretty easy decision but I wanted a sanity check to see if other people would do the same. I have no plans to pay this mortgage off early so I’ll be carrying the mortgage for another 7 years - if interest rates drop back to 0, I might take my excess cash and pay it off in a lump sum but I’ll decide that when it happens.
Would you guys keep these condos and let it provide income for the next 50 years?
Would you cash it out and use the money to invest for the next 7 years (and on through retirement)?
I own another Condo #2 in the same building that I paid $110,000 for. Zillow estimates that value at around $125,000 also.
Condo #1 has no mortgage. Total annual expenses are $4,800. Total annual rent income is $14,400.
Condo #2 has a mortgage balance of $45k at 3.5% with 7 years left. Total annual expenses (including mortgage) are $12,100. Total rent income is $13,200. Once the mortgage is paid off it will have the same annual expenses as Condo #1.
Both rentals are currently being rented at below market rate because I’ve had the same renters and I didn’t feel like raising their rates. When either condo is eventually rented again, I should be able to raise the rent by a couple hundred dollars per month. I’ve owned both units for over a decade and they’re in a desirable area and they get rented within 1-2 months of any vacancy notices. I self manage the units and I could probably chop that 1-2 month float in half if I tried a little harder in between tenants. Most of the time I have long term renters so float periods are not anything I worry about. Managing the units is trivial so there's no real stress or time overhead.
My eventual goal is to FIRE with a SWR of ~3%: for every $1M I save, I can rely on $30k per year. But these condos (once the mortgage is paid off) provide $26,500-$9,600 = $16,900 annual income. That’s the equivalent of a little more than $500k for only having around $200k of my own money invested or Zillows valuation of $250k opportunity cost. Presumably, I could raise the rates in the future and still keep the units rented easily.
I think keeping these units is a pretty easy decision but I wanted a sanity check to see if other people would do the same. I have no plans to pay this mortgage off early so I’ll be carrying the mortgage for another 7 years - if interest rates drop back to 0, I might take my excess cash and pay it off in a lump sum but I’ll decide that when it happens.
Would you guys keep these condos and let it provide income for the next 50 years?
Would you cash it out and use the money to invest for the next 7 years (and on through retirement)?
Statistics: Posted by rhinopylon — Mon Apr 01, 2024 11:32 am — Replies 2 — Views 158