Anonymous wrote:I think I can pay off my credit card debt in about 6 months because I took a second job and one of my kids is going to public school soon (hallelujah.) But I am starting my own business (have been basically doing this but consulting for someone else so I know this will be ok long-term.) But when you consult on your own your pay comes in waves so having less debt/fewer monthly payments is nice. But sounds like folks are leaning toward us keeping it for the tax benefit.

You don't sound spendthrift, so the fact that you have CC debt doesn't concern me as much as it would in general. You also sound like you're on track to pay it off this year. If you look at your tax savings from the property, how does it compare to the interest accrued on your CC debt? That's another way to evaluate if it's worth it. I agree with the PP that one way to evaluate this property is to get an idea of how much not having the cash from selling it has cost you.

Another thing to consider is whether you could raise the rent through a few small improvements.

yes agree PP, we definitely would not have bought it as a rental to begin with and that is an understatement

I think I can pay off my credit card debt in about 6 months because I took a second job and one of my kids is going to public school soon (hallelujah.) But I am starting my own business (have been basically doing this but consulting for someone else so I know this will be ok long-term.) But when you consult on your own your pay comes in waves so having less debt/fewer monthly payments is nice. But sounds like folks are leaning toward us keeping it for the tax benefit.

Would you have bought it as a rental to begin with? IF not, you should probably sell it.
The costs of carrying it are too high for your budget - hence the CC debt from not having an adequate EF.

Anonymous wrote:Yes I think it is a break even investment. It wouldn't totally sink us to have it go unrented but it would be very tight. We did buy at the very very top of the bubble. We refinanced a year or two ago at a very low rate 2.75.

Wow, that is a very low rate...it's basically free money. How long will it take you to pay off your CC?

Anonymous wrote:

Anonymous wrote:When did you buy...and how long would it take to get back to where you bought it (obviously this is somewhat conjecture). At a minimum I would not sell until the summer when prices are higher.

Oops, sorry, you kind of addressed the first question...though it matters a little bit as to whether it was near or at the top of the bubble. Since you have enough equity to do so, I'm wondering if you might not be better off re-financing at a hopefully low rate and paying off whatever you can of your loans. Do the tax savings due to interest deduction etc make it a break even investment for you right now?

PP again. Your highest priority should be getting rid of your CC debt, and exchanging it for a lower interest debt is one way to do that. I don't know the East Silver Spring market well enough to know the likelihood of your always being able to rent it and risks to its appreciation etc. I'm also not a fan of having a lot of debt on depreciating assets like a car, but you may have been able to get a low interest rate on it.

I strongly suspect you're in a grey area where the trade-off between selling and hanging on to the property isn't much. The biggest question is whether you'd feel a psychological unburdening if you got rid of your debt...that may be worth a lot to you.

Yes I think it is a break even investment. It wouldn't totally sink us to have it go unrented but it would be very tight. We did buy at the very very top of the bubble. We refinanced a year or two ago at a very low rate 2.75.

Anonymous wrote:When did you buy...and how long would it take to get back to where you bought it (obviously this is somewhat conjecture). At a minimum I would not sell until the summer when prices are higher.

Oops, sorry, you kind of addressed the first question...though it matters a little bit as to whether it was near or at the top of the bubble. Since you have enough equity to do so, I'm wondering if you might not be better off re-financing at a hopefully low rate and paying off whatever you can of your loans. Do the tax savings due to interest deduction etc make it a break even investment for you right now?

DR would say sell because he believes debt is a moral issue. I agree with his advice on many fronts, but not that one. So I think it's wise for you to look at the whole picture and decide. If you are sinking into debt, selling might be wise. Or if it were to go unrented--would it sink you?

we bought in 12/2005 at 340K and then the value lost about 100K almost immediately. It has crept back up over the last 9 years but only 60K. So I guess at that rate we're looking at another 5-10 years before it gets to 340K. We have the 15 year loan so at least we are aggressively paying it off. But they are aging townhouses in a not great area of town (east Silver Spring).

DR would probably say to sell then.

When did you buy...and how long would it take to get back to where you bought it (obviously this is somewhat conjecture). At a minimum I would not sell until the summer when prices are higher.

We owe 200K so if we sold I think we could pay off our other debt aside from our new house.

I think it depends what you still owe in total on the mortgage?

I wonder what Dave Ramsey would say about the fact that we kept our townhouse that we bought at the height of the market because it plummeted in value and we're still hoping it will appreciate. It's worth 300K and bought it for 340K. We rent it out and lose 200 a month but we are getting the principle paid down by a very responsible long term renter and we get the tax benefit of the 15 year mortgage interest deduction plus any repairs. That said, we still have other debt- credit card debt due to unexpected medical expenses (20k), 25K on a used car loan and 25K of student debt (8 years to go to pay off.) Would he say (or would you say) that we should sell the townhouse at the loss and pay off the debts? I'm guessing he would but I wonder if that really makes sense from a tax perspective. I guess I need to get an accountant. We're hoping the proximity to the purple line will make us rich (just kidding, sort of.)