I have leased my condo.

[Tobin S.]

I wasn't going to go that route. Just a few weeks ago I was still determined that I had to sell it. However, I realized that I would likely have to take about a $12,000 hit to make a deal and it just made more sense to lease it right now given my financial situation. It would take everything I have, and some money I don't have, to sell the place with that kind of deal.

I leased it to a woman who placed an ad on Craigslist. She's on a fixed income (which I verified) and has two cats and was finding it difficult to find a place under those circumstances. She's 55 and was living with her mother while going through a divorce. My place is inexpensive, as far as housing goes, and I don't have a problem with cats. I think we both needed a break. We made ourselves a deal and I did the lease myself- no property manager this time. I found all of the forms I needed online.

It was very touching to see her go through the place when I showed it to her. It's a modest one bedroom condo, but it is in a nice area and the condo is in very good condition. I had just replaced the carpet and painted the place. The bathroom has a new toilet. Overall, it's just a nice, comfortable little place, especially for a single person. She was thrilled with it. She was thinking she was going to have to live in the ghetto in a really run down place before she ran across me.

I've got a real problem with the realtor that I had the place listed with. In the MLS listing, I had him say that I was open to leases and land contracts in addition to an outright sale. He had the place since last April, and to my knowledge, only showed it a few times and never presented any offers to me. I thought that the market was just terrible. I leased the place in less than a week on my own. I'm getting the feeling that because he didn't stand to make much money on the place his motivation to make a deal wasn't very high and he just kind of ignored it.

I told the woman who leased the condo that she has the option to buy it at any time. I am still taking a loss on the place every month, but it's gone from $650 to a much more manageable $120. And I think I have a good tenant who won't tear up the place. She also said she'd like to live there for a long time. Hopefully, this will be a deal where we both win.

[Tuesday Afternoon]

1. good deal, Tobin

win/win is the best possible outcome. I hope it works out for both of you.

[TexasTowelie]

2. I hope it works out for both of you.

I'm a bit surprised that the realtor wasn't more proactive. I'm guessing that you had the standard 6 month listing with the realtor?

I know that when my parents tried to sell my childhood home the realtor did not try to sell the property very much until near the end of the contract with my parents. Even if your realtor had to split the standard 6% commission with a buyer realtor it should have resulted in a decent commission.

I was actively involved in the last home that we sold after my father died. I showed the property nearly ten times within the first couple of weeks after it was put on the market, then the activity started to slow down. If things are that slow then it may have meant that your asking price was too high in that market. I personally would never think about buying a condo because of the assessments that can be levied by the association.

[Tobin S.]

3. I dropped the price twice, over 10% each time.

I was asking $24,900 the last contract with my realtor. I owed $29,400 on the place. I was basically in a position where I was going to have to take 20 grand for the place. The contract was for a minimum of $2000 in commission.

I did three month contracts with the realtor. The last one expired last weekend.

[PasadenaTrudy]

9. What state is this in?

I've never seen a price that low for housing! When you live in SoCal, you forget what the rest of the country is like. I never see condos around me for under $450K or so. Also, beware RE agents, they are beneath used car salesmen in my book.

[Tobin S.]

14. The condo is located near Dayton, Ohio.

[PasadenaTrudy]

15. Ah, no wonder n/t

[Divernan]

4. My elderly neighbors' house sold the 1st hour it was listed!

The dark underbelly of the deal was that it was snapped up by a fellow realtor's son, who himself was an office worker for the same large broker for whom both realtors worked, AND was under priced by at least $50,000. They were perched like vultures ready to pounce the second it was "officially" listed.

The elderly couple were in their late 80's, and signed on with the first and only agent whom they talked to. Their 3 out-of-state kids (all financially comfortable) were furious when they realized how their parents had been ripped off of much needed money but had been too busy with their own lives to recognize their parents' reduced capacity to handle financial matters. In fact, the only reason the elderly couple sold the house and were moving closer to two of the 3 adult kids, was that neighbors had contacted the kids to point out that their Mom was still driving although blind from macular degeneration (Dad was too frail to drive, but would tell her when to turn, brake, etc.!), and that Dad had had numerous ER visits from falling (which Mom & Dad never told their kids about).

My points are: (1) Always get bids, including specific comparable properties on the market, from no less than THREE different real estate agencies and (2) keep in close touch with and keep close tabs on your elderly parents.

When I sold my Mom's house, I got 3 bids for the listing and then went and did drive-bys of the comparable properties. Right! One had a backyard with a fence separating it from the Baltimore Beltway; another was perched at the top of a steep flight of steps; all of them were brick and siding; - compared to my mom's all stone ranch on a level lot in a quiet street. So I insisted on listing it at a higher price and it did sell within 2 months. I also picked the realtor who was the most positive about the house and not the one who acted like she was doing me a favor since most of her listings were McMansions.

And the "rest of the story"? The 30-something guy who basically stole my neighbors' meticulously landscaped and lovely home has let it go to hell. He apparently does not have a lawn mower, to the extent that the township receives complaints and issues orders for him to cut down the overgrown (4 - 6 ft. high weeds), which he ignores so every few months the township has their maintenance people cut the lawn and bills him around $400 for it. The guy leaves his garbage cans in the front yard between weekly pickups. The front porch is littered with junk. It's to the extent that this once lovely property is so run down that it impacts on the property values of other homes on the street.

[mnhtnbb]

5. My parents were probably similarly ripped off about 15 years ago

in a similar situation. Both my brother and I were out of state and my parents'--in their late 80's--
were always fiercely mum about their finances. We only discovered they'd sold
the house after the deal was done with my dad's realtor 'friend'. My brother travels
a lot for work and he had been the one looking in on them physically every couple of
months. The sale didn't harm the values in the neighborhood, it was just a very
desirable area and the realtor, we suspect, made a very good deal for another 'friend'.

[narnian60]

6. Congrats to both you and your tenant.

We also own a condo and know how nice it is to have paying, responsible people in it.

[vlyons]

7. the loss on your rental should be tax deductable

so hopefully it's a break-even financially. Talk to a tax adviser to see if it's tax deductable.

[taught_me_patience]

20. Probably not.

Not allowed to take a passive loss. Rental property is classified as "passive".

[mnhtnbb]

8. Congrats on the lease!

Hope she turns out to be a good tenant.

Do you mind me asking what interest rate you're paying on the loan? At the amounts you mention,
I'm surprised you are still in the hole every month. Is a lot of the fixed cost HOA dues?

[Tobin S.]

16. The loan is at 6% 30 year mortgage and $33,500 original loan amount

The payment is about $305 including taxes and insurance. The condo association fee is $214 a month. Total payment of about $519 a month. I've also been paying the electric bill since it is cold here and I need to keep a little bit of heat going. That bill was about $125 last month. So, total cost to me without a tenant is around $643. The tenant is leasing for $400 a month and also paying the electric bill. That leaves me with $120 to cover on the place every month.

I tried to refinance the condo after the housing crash and I couldn't get a loan on it. Mortgage lenders at the time wouldn't re-finance anything below $60,000. That may have changed, but I can't afford enough of a down payment now to come out ahead of the closing costs I don't believe.

[riderinthestorm]

17. I've seen rates as low as 3.6% lately. Maybe try and see if you can re-fi again now

Good luck!

[Tobin S.]

18. The problem is that you generally cannot refinance for free.

On my place I'd be looking at about $2000 in closing costs to do the deal. It may take 15 years to recoup that money through lower interest rates on a place as cheap as mine, even with an interest rate that low. In other words, even if I can get a deal to go through, it won't be worth the trouble because I'm not planning on owning the place that long.

I'm about a third of the original mortgage underwater anyway. I simply don't have the cash to do a refinance deal right now.

[mnhtnbb]

22. Do you have family or friends who would consider making a loan to you

at, say, 4% or 4.5% for the amount to pay off that 6% loan? There are a lot of folks--retirees, especially--
who would be happy to get that kind of rate on $25,000 or $30,000 because CD's and savings accounts pay
next to nothing these days. You could save yourself upwards of 20% on your mortgage payment if you could
find a private party to give you a loan--and no closing costs-- for 5 or 10 years amortized on a 30 year schedule.

[elleng]

10. Great news, Tobin!

[CaliforniaPeggy]

11. Congratulations to you, my dear Tobin!

I am really happy to hear your great news....and I know you are too!

She sounds like a great tenant and I hope things will continue this way for you both.

What a relief!

[Suich]

12. Great news, Tobin!

Last edited Wed Feb 18, 2015, 12:57 AM - Edit history (1)

Hope everything works out for the long-term!

[cwydro]

13. Good to hear!

Yay!

[hunter]

19. Woohoo!

Much better than empty.

My parent's old house was empty and underwater for a long time. Not a good feeling.

A lovely place with great neighbors, but no work in town.

Came a day they were happy to lease it at a similar loss.

[KMOD]

21. Wonderful news, Tobin.

I'm sure that is a big weight off of your shoulders.