Hold or Sell Property?

[honobob]

The way I read your posts is that there is never a good time to sell RE. The buyer is always right, the seller always wrong. How can that be? It implies a market permanently out of balance.

Ha

Exactly!!!!!!!!!!!!!!!! Unless you're ready to reinvest into a better deal in CA. Most people realize that if they leave CA that they can not return!! It's been posted here by people other than me. If you move from an area that is appreciating by 10% a year and move to a place appreciating at 4% a year you are losing ground rapidly.

Now if you're sure you'll never want to come back then OK! Better still, don't cash out here but buy/rent in the new area and fund your life there with the appreciation HERE! Oh yeah, tenants,toilets trash. It'll cost ya, but how much? Not much for me cause I'm a Captain of Industry!!

Ha, it's just math and a little projection of future events. The market is not out of balance, it's just growing for the forseeable future!

 

[honobob]

700k seems low ... not getting enough info from the OP. Max tax bracket is 36% then add CA state tax. Seems like she's loosing too much to taxes. Unless there's a mortgage ...

yeah



5% rent increases are completely acceptable for her since she can park the wad - at no risk - and make a greater return. Bummer if she can't stay ... need to hear from the OP on that.

no risk > 5% forever

Loosers of this game are turning up every day ... that's why we have the mess we do.

Losers in CA Show Me



Ah, because when you buy today at 1.3M you're looking at ~9K/MONTH NEGATIVE cashflow (depending on how you financed this beast). Rent control killed this deal.

Cash flow



There are greater opportunities in CDs (even greater in a bond/stock fund). AND no need to wait.

OK not much sense debating this until the OP states all the parameters since you want to negate his inputs. I think we have ability to reach a conclusion based on full disclosure. Still, you have not responded to your belief of no appreciation in value or rents! Are you basing your response solely on your belief that the MOM can benefit from rent control?

 

[tryan]

Still, you have not responded to your belief of no appreciation in value or rents! Are you basing your response solely on your belief that the MOM can benefit from rent control?

Appreciation of rents:

Just look at what the past years rent increases have done for her. She's limited to profiting 15k on a 1.3M house. I'ld NEVER bet against rent control ... people grow old, die and pass the apartment onto family.

Appreciation of value:

For any future appreciation you're playing into the greater fool. Your current buyer - at 1.3M - is HEMORAGING 9K/month ... all to obtain 39k per year of the fairy's gold. Rental profits are non-existent due to rent control. Reseting the tax basis to 1.3M will consume even more of your REAL hard earned CASH - no fairy's gold there. So the only question is: when do fools stop coming to the party ... 10k/month negative? Not a bet I'ld make ... especially when CD's are paying nearly 3 fold your current return.

The $$ will chase the higher return. Real estate had a great run. Now it's something elses turn.

 

[Financial Dancer]

Some great replies. Good debate.

My mom does have a mortgage loan and that's why she's only left with $700k if she sells.

She also has rents one unit that is around $600/mo below market rent. She is hoping this renter will move out in the next few months, thus increasing market rent and market value on the property.

If she sold and stayed as a tenant, I would imagine this would be similar to her renting a different place in the same area with the same 5% rent cap. If she gives herself a low rent, it will lower the amount she can get for the property, so I don't see the advantage. Anyways, she wants to move into a smaller apartment in the same neighborhood. That's her goal.

It seems that the days of double digit appreciation on CA residential is over. My mom talked to a real estate broker and found out the value of her property dropped around 13% since 2005.

I'm not sure how anyone can think double digit appreciation can keep going on indefinitely, without wages going up at a similar pace.