I am terrified of getting a mortgage

[Karloff]

This thread is giving you some good feedback, comments like this will get it closed down in a New York minute.

Not sure I understand the above. What I describe in my comment is 100% true. I see it everyday. Google “Sunny Isles Beach, Florida, Anchor Babies”, if you do not believe me. Not trying to sidetrack this thread at all, nor implying anything remotely sociopolitical. Simply stating facts and what we all here in this neck of the woods deal with. As for the price of our condo, it has now been lowered by yet another $10k.

 

[pb4uski]

Don't sweat it Karloff, ivinsfan seemed to be the only one that was concerned about it. It is what it is. Carry on.

 

[Karloff]

Don't sweat it Karloff, ivinsfan seemed to be the only one that was concerned about it. It is what it is. Carry on.

Thank you!

 

[tulak]

I have no issues having a mortgage. I’ll probably always have one. Personally, I consider a mortgage up to 10% for your liquid network as safe and would be my ideal spot going into retirement. Odds are good that you’ll come out ahead investing the money instead of paying off a mortgage. And if you don’t, as long as you manage the cashflow (don’t leverage yourself too much), you’ll be fine.

And to answer the question, would I borrow money to invest?

Sure. I did that around 2012. It was an HE loan which I paid off years ago. It wasn’t a lot of money and I came out ahead.

I’m not advocating this approach for anyone else, but if you’re comfortable with the cash flow side of things, then there’s little harm into taking on small amounts of debt. In your case, I think it’s a no brainer. Good luck!

 

[ERD50]

Originally Posted by Another Reader View Post
Time to talk to the other rental owners and sellers in the building and go for a rule change to allow short term rentals. Circulate the comparable sales to every unit owner in the building and get whatever percentage you need to support a change in occupancy rules. Recall the existing board if you have a lot of support and the current board won't act.

This is actually a catch 22 for us. I do believe that if we allow daily rentals the property values would go up, but as full time residents and owners who enjoy peace and quiet we also do not want this place to become a hotel. As things stand now, the quality of the people has been on a steady downhill trend, and this would only get worse with revolving doors...

Step back and re-read what you wrote. You already have told us you don't want to live there because of all the 30 day rental activity (you don't have the peace and quiet). So what difference does it make if it gets worse with 1 day rentals? You are out of there (with a higher $ amount), and the other short-term renters don't seem to care that their neighbors are short-term renters (or the values would not have gone up).

I think you need to step back and clear your head. In my opinion, the answers to all your questions are obvious. You seem like a bright person, so I suspect you just are a little too close to the situation to see it clearly. To be direct:

A) A mortgage of ~ $100K when you'd have ~ $1M in liquid assets going in is not something to be afraid of. Especially at today's rates. One of the last things to think about from a financial aspect would be to pay it off early.

B) If you and others can convince the board to accept daily rentals, and you feel that would increase the selling price significantly, do it. My concern would be how long this might take - you might be better off just putting this behind you and getting on with your life.

-ERD50

 

[Tiger8693]

I agree with those proposing small mortgage. It's a cash flow question really, and the low interest rates just make it a smaller impact on cash flow. Oh, and drop the price and get out! You are "paying a mortgage" now with that monthly fee.

 

[ATX78701]

Zero reserves? Poorly maintained building? Get out now, take the loss, take the mortgages, pay it off early as you are able.

 

[Mulligan]

I agree with those proposing small mortgage. It's a cash flow question really, and the low interest rates just make it a smaller impact on cash flow. Oh, and drop the price and get out! You are "paying a mortgage" now with that monthly fee.

“Cash flow question”, that is precisely way I see it Tiger...A small mortgage while they are still working? That a stroll through the park problem to eliminate their condo burden. Heck I have been retired for 10 years. And not only do I have a small mortgage payment still, I also have a car loan, servicing a small amount of credit card debt, and a small home equity loan. Could I pay it all off? Sure, but my monthly pension cash flow covers it all and I still save some money out of it also.
No cash flow problems at all, and they wont either.

 

[ShokWaveRider]

No wonder you cannot sell it based on your OP. I was wondering if it is in a desirable part of SWF? Seems like trying to sell a place round here that has a history of flooding, even if only 1" and only once. They are worse than boat anchors here, buyers are getting smarter.

 

[Tiger8693]

I think it's a matter of location. My best friend from HS/College just bought a condo in St Pete at pre-construction ~$1MM (1600 sq ft). Looking at it online now, selling at 40% above that less than 1 year later. Location, Location, Location....

 

[carnivalday]

How much traffic are you getting to your condo? Are you getting showings? You didnt mention anything about that. You state "the price is right"...but is it right, or is it what you want for it? I read a lot of real estate forums, and people who cant sell their homes state that the price is right, but theres no traffic and it sits on the market. Theres always a price that a home/condo will sell for. If you priced it at $25,000, it would sell, right? Im not saying to do that, but there is a price somewhere between that and your price that it will sell at. You just have to decide what is more important to you, waiting on the price you think you have to have, or pricing it to where you can move on with your life. What price is peace and quiet worth?

 

[Karloff]

No wonder you cannot sell it based on your OP. I was wondering if it is in a desirable part of SWF? Seems like trying to sell a place round here that has a history of flooding, even if only 1" and only once. They are worse than boat anchors here, buyers are getting smarter.

This is in SE FL, in the Hollywood / Hallandale Beach / Sunny Isles Beach area.

 

[Karloff]

I think it's a matter of location. My best friend from HS/College just bought a condo in St Pete at pre-construction ~$1MM (1600 sq ft). Looking at it online now, selling at 40% above that less than 1 year later. Location, Location, Location....

We love St. Pete! We travel there often and the Dali Museum is a mandatory stop, as are all the bookstores and record stores. I would not mind retiring there one day, but it is way overpriced now. Yes, I saw the million dollar condos, too. I have no idea who is buying them. We went through something similar here and look at where we are now...

As for our condo, the area could not be more desirable... The problem is the building itself.

 

[ugeauxgirl]

I agree with those proposing small mortgage. It's a cash flow question really, and the low interest rates just make it a smaller impact on cash flow. Oh, and drop the price and get out! You are "paying a mortgage" now with that monthly fee.

I agree with this. The condo situation scares me. You could be in a home you love, and reduce your risk in the scary condo situation for $150 less every month. I dislike debt too. Just pay it off early with that $150/month you'll be saving on the HOA fees.

 

[Rustic23]

Debt is just another bill that has to be paid! Yea too much is scary, but you are no where near that level. Isn't you condo fee debt? well not actually but just like it, along with special assessments and such. You appear to have the money in the bank to pay it off anytime you want. On a 15 year note, you will pay about $1,200 a month, and about $200,000 for a $150,000 loan. So you new home all in would cost you $200,000 in retirement savings. Pay in full today $150,000. If having debt cause you to loose sleep, pay in full, and replace the money over time.

 

[Karloff]

How much traffic are you getting to your condo? Are you getting showings? You didnt mention anything about that. You state "the price is right"...but is it right, or is it what you want for it? I read a lot of real estate forums, and people who cant sell their homes state that the price is right, but theres no traffic and it sits on the market. Theres always a price that a home/condo will sell for. If you priced it at $25,000, it would sell, right? Im not saying to do that, but there is a price somewhere between that and your price that it will sell at. You just have to decide what is more important to you, waiting on the price you think you have to have, or pricing it to where you can move on with your life. What price is peace and quiet worth?

I do see the logic in the above. In this case, what I meant to say is that the price was "right' based on recent sales for units that are identical to ours, and the average sale price in the rest of the building. Our unit is not the norm in the building because it is a corner unit (more or less like a small home, really, with oversized rooms). Most units are about 400 sq/f smaller. The unit above us (identical floorplan) sold for $399K a couple of years ago, but without impact windows. Ours has impact windows (this adds +/- $25K). The unit next to ours (identical floorplan, no impact windows, no updates at all) sold for almost $500K about 10 years ago. A unit like ours but immediately facing the ocean and with NO updates nor impact windows just sold for $520K 3 months ago. Units in the building next door are going for $200K more, on average. And our unit was appraised at $460K, etc, etc. We even pay taxes on an appraised value of $408K! I fight this with the county every year, but there is no way of making them see reason. So we feel that our asking price of $385K is "right". But, you are absolutely correct: the market determines what's "right'. And things have gone downhill quickly because the building has gone through multiple managers in one year, depleted reserves, and is getting a bad name in the area (it is well deserved, sadly, and it is not alone...).

And, no, sadly, we only got *one* offer in 1 year... It is low. We are now seriously considering just going with it but have not made a final decision.

 

[ShokWaveRider]

This is in SE FL, in the Hollywood / Hallandale Beach / Sunny Isles Beach area.

Thanks, I obviously misread your OP regarding location, folks always talk about SWFL, it becomes a habit.

Condo Building issues are rampant here also, probably due to the fact most are quite/very old, some mismanaged, most with a lot of rentals.

I would be quite skeptical buying a condo anywhere in Florida Coastal areas if the buildings are old or in flood zones other than "X" or "X Shaded". lower flood zones can play havoc with foundations.

Almost better getting a SFH, $650 a month buys you a lot of maintenance, and YOU are in full control.

 

[Tiger8693]

This is in SE FL, in the Hollywood / Hallandale Beach / Sunny Isles Beach area.

No offense, but those areas are nothing like St Pete, thus driving the price point diff.

 

[Karloff]

No offense, but those areas are nothing like St Pete, thus driving the price point diff.

As I said above, I LOVE St. Pete! But it is apples and oranges, really. Depends on one's priorities.

 

[ivinsfan]

I do see the logic in the above. In this case, what I meant to say is that the price was "right' based on recent sales for units that are identical to ours, and the average sale price in the rest of the building. Our unit is not the norm in the building because it is a corner unit (more or less like a small home, really, with oversized rooms). Most units are about 400 sq/f smaller. The unit above us (identical floorplan) sold for $399K a couple of years ago, but without impact windows. Ours has impact windows (this adds +/- $25K). The unit next to ours (identical floorplan, no impact windows, no updates at all) sold for almost $500K about 10 years ago. A unit like ours but immediately facing the ocean and with NO updates nor impact windows just sold for $520K 3 months ago. Units in the building next door are going for $200K more, on average. And our unit was appraised at $460K, etc, etc. We even pay taxes on an appraised value of $408K! I fight this with the county every year, but there is no way of making them see reason. So we feel that our asking price of $385K is "right". But, you are absolutely correct: the market determines what's "right'. And things have gone downhill quickly because the building has gone through multiple managers in one year, depleted reserves, and is getting a bad name in the area (it is not alone...).

And, no, sadly, we only got *one* offer in 1 year... It is low. We are now seriously considering just going with it but have not made a final decision.

quoting prices from 3 and 10 years has no relevance today. You already mentioned the building next is zoned for shorter rentals. Some buyers will pay a huge premium to face the water, that's always been true.

It must be beyond frustrating to see your place declining in value while the places you want to buy are rising. Sadly I think you will either sell for what you feel is a lowball price or just stay because of the lowball offers. Only you can decide what works for you. I don't remember if you mentioned what you paid for the condo,but remember it always costs something to live somewhere.

Good Luck...

 

[Karloff]

It must be beyond frustrating to see your place declining in value while the places you want to buy are rising.

This is exactly what we are going through and the main source of our frustration.

We would have no loss, to be honest, even if we sell at the single lowball price that we were offered. But it is still shocking to see how quickly things can go downhill... Right now, there is not even a motion trend... it's more like a "full stop". The sale I mentioned from a few months ago was the last one in the building, and the new owners now feel like they were ripped-off and overpaid. There have been no sales in the building since.

Our concern is not really making nor losing money, but simply being able to more or less afford the type of house we would love without touching much of our savings. Retirement is still priority #1. A year ago, we thought we could easily afford a $500K single-family home by selling our condo around $450K or so, and dipping on our savings just a bit. No big deal. Our dream was a new construction home. We even made a deposit on one, thinking the condo would sell in a matter of days. How clueless we were... Luckily, we got our deposit for the new home back... And today, almost one year later, it's looking like we will sell at around $100+K less than what we thought, so the main question is "do we buy a lot less home than we dreamed of, or do we get a mortgage to finance the -/+$100K difference?". Since I am debt-averse to the point of it being a psychological drain for me, we may do just that, although the comments on this thread are convincing me that the $100K mortgage would not be the end of the world after all...

I do appreciate all the comments and feedback!

 

[ShokWaveRider]

Karloff: You will most likely have to go "Way" inland to get a new home for ~$400k - $500k. I do not know for sure, but looking at Zillow it seems that way.

 

[carnivalday]

I am sure where you are living now is causing you misery, and stress...and will eventually, if it hasnt already, cause health issues. You folks are still young, with a decade or two of high earnings ahead of you. You work at home; how much is working somewhere that you have to leave to just hear a phone call costing you in productivity. How would you feel working from a new home where its peaceful and quiet and you love being there?

Money is for making your life better. That money sitting in that account isnt doing much to help that. You have 2 decades left to make up that difference. Fire sale that sucker and get out of there. I cant imagine the peace and joy you will experience when you are shopping for that wonderful new home. If you were 60, Id have a different answer, but you're not. Every day you arent loving your life is a day wasted. And no one has days to waste.

 

[Karloff]

Karloff: You will most likely have to go "Way" inland to get a new home for ~$400k - $500k. I do not know for sure, but looking at Zillow it seems that way.

Not necessarily. And we do not really care to live on the beach anymore. I really could not care less about it, to be honest.

You can purchase a brand new construction home today in Hollywood for $500K. Or even $450K in the Pompano Beach area (but this is a little too far for us). There are many homes under $400K in the Pembroke Pines and Davie and Cooper City areas. But they are not really what we wanted, mainly because they are older homes that would need new windows, etc. For us in South FL, impact windows are a must. The last thing I want to do is spend $100K from savings or get a mortgage, and then spend another $30K on new impact windows... The new homes are built to the latest codes and come with these windows as standard, which also significantly lowers insurance premiums.

 

[Karloff]

I am sure where you are living now is causing you misery, and stress...and will eventually, if it hasnt already, cause health issues. You folks are still young, with a decade or two of high earnings ahead of you. You work at home; how much is working somewhere that you have to leave to just hear a phone call costing you in productivity. How would you feel working from a new home where its peaceful and quiet and you love being there?

Money is for making your life better. That money sitting in that account isnt doing much to help that. You have 2 decades left to make up that difference. Fire sale that sucker and get out of there. I cant imagine the peace and joy you will experience when you are shopping for that wonderful new home. If you were 60, Id have a different answer, but you're not. Every day you arent loving your life is a day wasted. And no one has days to waste.

Thank you. You are absolutely right.