Here's the situation: Bought a co-op at the height of the market in a safe but not particularly desirable neighborhood in Jersey City. It was $400K and we put 20% down. It is now much too small for family situation and not possible to live there. Co-op has strict rules about renting - we can't do it. We've moved out, now living in a rental, and are also paying the mortgage on the Jersey City place... [more]
Here's the situation: Bought a co-op at the height of the market in a safe but not particularly desirable neighborhood in Jersey City. It was $400K and we put 20% down. It is now much too small for family situation and not possible to live there. Co-op has strict rules about renting - we can't do it. We've moved out, now living in a rental, and are also paying the mortgage on the Jersey City place even though it's just sitting there. The value is underwater, so if we sold, we would not only lose the down payment, but probably have to fork over another $30K to the bank.
Here's the question: We are not wealthy by NYC standards, but we can afford the payments on the Jersey City place. While I would prefer to be putting that money toward a bigger rental, or into savings (i.e., long term stocks), we are not going to starve - it's just very annoying and a weight on our shoulders. So do we sell the Jersey City place, and just eat the loss and loan re-payment? Do we consider a short sale / foreclosure despite what this will do to our credit? Or do we resign ourselves to the fact that we might have to hold onto for another 15-20 years before we can get any value out of it, and look at it like a diversified way to invest long term? If that latter, do we try to aggresively pay down the mortgage quickly so it's less of an emotional strain? Thoughts?
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Response by aboutready
over 13 years ago
Posts: 16354
Member since: Oct 2007
the man upstairs? would that be blankfein or geithner?
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Response by dealboy
over 13 years ago
Posts: 528
Member since: Jan 2011
No, it's about spending less than you earn.
There are scores of public sector workers who retire as millionaires.
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Response by w67thstreet
over 13 years ago
Posts: 9003
Member since: Dec 2008
Fking hilarious.
Dealturd and Ali. Two posters that need to be taken down a few notches.
W67 no speakie English. W67 not go to Harvard. W67 no raise $$$ for campaigns.
W67 not Borker. W67 no buy bubble. W67 made $1mm in Sprint in 4 months. W67 will make $2mm more bf any pos apt you sold in the nxt 8 qtrs.
Dealboy. Just stfu and go buy more $200k 3bdrm condos in chicago, Vegas, Cali and miami. Say hi to fellow on 'investor' ph41.
Gotta re think ivy choices for my kids....
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Response by w67thstreet
over 13 years ago
Posts: 9003
Member since: Dec 2008
Re is NOT an investment. Tulips smell good. Pearls look pretty on naked women. But the lady in question would've looked pretty naked anyway.
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Response by glamma
over 13 years ago
Posts: 830
Member since: Jun 2009
priceless.
what do you say to the millions of starving people in africa?
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Response by Truth
over 13 years ago
Posts: 5641
Member since: Dec 2009
w67th say: Buy Sprint so he and other investors will have money to contribute donations to the charities that donate money to the cause.
Really.
Who do you think sends checks to those charities?
It's not nitwits like you.
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Response by Truth
over 13 years ago
Posts: 5641
Member since: Dec 2009
You need to have an "off the board discussion" with the bully gang, w67thstreet.
I'd like to see proof of what that nitwit ever contributed "to the millions of starving people in africa".
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Response by nyc1234
over 13 years ago
Posts: 245
Member since: Feb 2009
i would base the decision on ur overall investment portfolio.
if u r very long bonds, i would sell the thing and re-buy at a similar price and rent it. this will neutralize ur long-term interest rate exposure as a mortgage is basically a short-bond. it will also prevent u from selling at loss at a point that may provide u a "reasonable yield" (again this is only assuming u r very long bonds, like 80+%). it's not the best investment in the world but essentially a small hedge which may provide rental income in the future. also if u r that long bond anyways ur discount rate is very low so the rental yield may not be horrible relatively speaking. i would add the caveat that u shouldn't own any rental property until u understand what u r getting involved in (ie can waste a lot of time dealing with issues). if renting is too much of a pain practically, u could also sell and reinvest some $ into VNQ to get to some real estate exposure. it is easier to titrate, less work than directly renting, and the national yield on real estate is better than that in nj or the tri-state area. oh also, the expenses on VNQ are minimal.
if u r very long or moderately long stock with the cash u have (over 40-50%), then sell the thing, cut ur losses and move on.
either way, it is a bad idea to borrow money for a depreciating asset unless it provides either some rental cash or allows u to save money by not renting urself. as neither of these conditions are met by the current property, i think it is a no-brainer to sell it.
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Response by nyc1234
over 13 years ago
Posts: 245
Member since: Feb 2009
when i said this: "i would sell the thing and re-buy at a similar price and rent it."
i meant re-buy a similar property but one that allows u to rent
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Response by Truth
over 13 years ago
Posts: 5641
Member since: Dec 2009
nyc1234: That's correct.
To the OP:
"Hey, diddle, diddle
won't you meet me in the middle
When I tell you to
Walk this way
walk this way..."
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Response by alanhart
over 13 years ago
Posts: 12397
Member since: Feb 2007
stifle
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Response by aboutready
over 13 years ago
Posts: 16354
Member since: Oct 2007
waffle
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
mmm, with maple syrup. mmmm
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Response by somewhereelse
over 13 years ago
Posts: 7435
Member since: Oct 2009
"And why do you guys think it's better to take the loss instead of looking at it as a long-term investment?"
Because it isn't an investment. An asset that you pay into indefinitelyis not an investment. Owner occupied real estate is not an investment. A property you can't generate income from is not an investment.
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the man upstairs? would that be blankfein or geithner?
No, it's about spending less than you earn.
There are scores of public sector workers who retire as millionaires.
Fking hilarious.
Dealturd and Ali. Two posters that need to be taken down a few notches.
W67 no speakie English. W67 not go to Harvard. W67 no raise $$$ for campaigns.
W67 not Borker. W67 no buy bubble. W67 made $1mm in Sprint in 4 months. W67 will make $2mm more bf any pos apt you sold in the nxt 8 qtrs.
Dealboy. Just stfu and go buy more $200k 3bdrm condos in chicago, Vegas, Cali and miami. Say hi to fellow on 'investor' ph41.
Gotta re think ivy choices for my kids....
Re is NOT an investment. Tulips smell good. Pearls look pretty on naked women. But the lady in question would've looked pretty naked anyway.
priceless.
what do you say to the millions of starving people in africa?
w67th say: Buy Sprint so he and other investors will have money to contribute donations to the charities that donate money to the cause.
Really.
Who do you think sends checks to those charities?
It's not nitwits like you.
You need to have an "off the board discussion" with the bully gang, w67thstreet.
I'd like to see proof of what that nitwit ever contributed "to the millions of starving people in africa".
i would base the decision on ur overall investment portfolio.
if u r very long bonds, i would sell the thing and re-buy at a similar price and rent it. this will neutralize ur long-term interest rate exposure as a mortgage is basically a short-bond. it will also prevent u from selling at loss at a point that may provide u a "reasonable yield" (again this is only assuming u r very long bonds, like 80+%). it's not the best investment in the world but essentially a small hedge which may provide rental income in the future. also if u r that long bond anyways ur discount rate is very low so the rental yield may not be horrible relatively speaking. i would add the caveat that u shouldn't own any rental property until u understand what u r getting involved in (ie can waste a lot of time dealing with issues). if renting is too much of a pain practically, u could also sell and reinvest some $ into VNQ to get to some real estate exposure. it is easier to titrate, less work than directly renting, and the national yield on real estate is better than that in nj or the tri-state area. oh also, the expenses on VNQ are minimal.
if u r very long or moderately long stock with the cash u have (over 40-50%), then sell the thing, cut ur losses and move on.
either way, it is a bad idea to borrow money for a depreciating asset unless it provides either some rental cash or allows u to save money by not renting urself. as neither of these conditions are met by the current property, i think it is a no-brainer to sell it.
when i said this: "i would sell the thing and re-buy at a similar price and rent it."
i meant re-buy a similar property but one that allows u to rent
nyc1234: That's correct.
To the OP:
"Hey, diddle, diddle
won't you meet me in the middle
When I tell you to
Walk this way
walk this way..."
stifle
waffle
mmm, with maple syrup. mmmm
"And why do you guys think it's better to take the loss instead of looking at it as a long-term investment?"
Because it isn't an investment. An asset that you pay into indefinitelyis not an investment. Owner occupied real estate is not an investment. A property you can't generate income from is not an investment.
Get rid of it.