is it "worth" it to keep a rental where you lose $400/month

[Anonymous]

Are you sure you can't refinance it? Costco Mortgage has some pretty sweet deals going on, and the calculator says the do investment properties.

[Anonymous]

Anonymous wrote:How much principal do you add every month? If it is much more than $400 you may come out ahead keeping the condo.

I'm amazed that so many people focus on the short term tax implications and not on this. OP, a lot of this depends on your mortgage payment and how much rent you're getting. Yes, you may be paying $400/month + espenses, but if that plus the rent permits you to pay down $1000 in principal each month, it's still not a terrible idea long-term, assumign you don't have a cash-flow problem now. Consider it forced savings.

I suspect OP can't refinance because she doesn't have enough equity, and investment properties have a higher threshold than primary residences.

[Anonymous]

Anonymous wrote:I have been renting out a condo in Arlington where I lose $400/month. The value has gone up about 100K- however I would only clear about 25K after capital gains, realtor fees and paying off a HELOC. I can't refinance b/c it's an "investment" property.

Cons: I fear that I will have to put some money into it pretty soon since the appliances are all original (1997) and it needs some updating. I think it would take about 5 years to net zero on the property.

Pros: great for taxes and taking the loss but not sure it's worth it

thoughts?

I assume you are talking about a cash flow loss. Did you look, however, at how much of your principle is getting paid off every month? That's not a loss - that's your net worth increasing. And did you factor in the tax deduction for the depreciation that you would loose if you sold the property? It may not be as bad a proposition as you think.

[Anonymous]

OP, we keep our rental even though we lose $1,200 on it annually (though fluctuates with rental rates) because we get $35K in rent annually. It's a half block to the metro, so we'll keep it in the event our kids will want to live there and will be paid off in 5 years.

[Anonymous]

pp here, and I wouldn't worry about updating the property. Ours is not updated, but has a great location, so we price it accordingly and last time we leased it went the same day. Too many overdone rentals sit on the market.

[Anonymous]

HARP 2.0 will let you refi an investment property, even if it is underwater. We are in the middle of doing so right now, and have gotten very favorable terms.

[Anonymous]

I pay about $350 extra on my rental in NW DC, but my equity is paid down $670 in month 1, $673 month 2, $676 month 3 and so on.As I see it, my $350 becomes $670 and more as months go by.
How about your equity vs $400?