Need help and advice

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fishfinder333

New member
Need some advice guys. So the current situation is im 30k-40k under what i paid on my current place. Bank will not help me refinance and definitely need to move out because we?ve outgrown the place. I have 2 options.

Option one, I can sell the place and lose my entire down payment and breakeven.

Option 2, rent the place out, but monthly rental income will not cover mortgage, prop tax and hoa dues. With rental income I would still have to pay about $850 out of my own pocket to cover monthly expenses. We can cover the additional $850 per month on the rental, but I?m not sure if it makes financial sense. The only benefit of renting out would be tax benefits and rental income slowly paying down loan and hoping home prices recover with time.
What do you guys think I should do?
 
Just some clarity, if you can sell and break even... then you are not $30k-40k under water. It sounds like the current value is $30-40k under what you bought it for, is that right?
 
irvinehomeowner said:
Just some clarity, if you can sell and break even... then you are not $30k-40k under water. It sounds like the current value is $30-40k under what you bought it for, is that right?
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oh yes sorry, its 30 to 40k under what i paid. I'm not under water.... yet  ;)
 
if you can cover an 850 month shortfall on the cash flow then you probably make a good chunk of change. Keep in mind that once your AGI goes over about 150K (going off memory) then you can no longer deduct rental losses.
 
I would be very careful when seeking this advice from us Internet strangers.

You should really consult your family, your accountant... and your family again.

You say you have outgrown the house but without specifics I don't know exactly what that means. Would it be better to stay put and ride it out? If you do rent it out, are you going to buy again or re-rent somewhere else? And whatever that scenario is, with the $850 shortfall... can your budget handle it?

This is a tough question to answer without details... and I don't think the details are something you want to share here so the best I can tell you is to make sure you think it all the way through before you do something that entails a loss of a large amount of cash.
 
irvinehomeowner said:
I would be very careful when seeking this advice from us Internet strangers.

You should really consult your family, your accountant... and your family again.

You say you have outgrown the house but without specifics I don't know exactly what that means. Would it be better to stay put and ride it out? If you do rent it out, are you going to buy again or re-rent somewhere else? And whatever that scenario is, with the $850 shortfall... can your budget handle it?

This is a tough question to answer without details... and I don't think the details are something you want to share here so the best I can tell you is to make sure you think it all the way through before you do something that entails a loss of a large amount of cash.
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I agree. I've just been racking my brain over this decision so much I think I'm getting tunnel vision. needed to think out loud. thanks for the opinions guys.
 
fishfinder, did you buy in a newer TIC community? Don't have to answer if it's too personal.

As for your situation, you'd need to post too many personal details of your financial situation for me to even comment. I'd setup a meeting with your financial planner if I were you.
 
The rental loss you can deduct is limited to 25,000 if your MAGI is less than 100,000.  Keep in mind that this limit is reduced if your MAGI is between 100,000 to 150,000 and is completely phased out after 150,000.
 
Hi guys thanks again for the advice. I don't know enough about tax implications on income taxes. Ultimately taxes are going to decide if i sell or rent. I'm going have to consult my accountant.
 
I've been a landlord for 15 years. There is a certain lifestyle shift when you become a landlord. It's not just the $850/month.  It's the time involved calling contractors, reviewing tenants, etc...that counts as well. We just had our heat pump go out and it may cost us between $4,000 and $8,000. You have to be able to come up with that money pronto. Bad tenants can be very time-consuming. HOA's can be run poorly or run into special circumstances that require special assessments (ours was $4,000...mostly covered by my ins.)

We've sold four properties rather than keep them as rentals because of these issues. We still have one as a long-term investment, though. Good luck.
 
dont forget you wont be able to purchase a new house unless you make some serious dough.  I was told recently, that the LTV on the current prop has to be below 75% in order to be able to offset home expenses with rental income from that prop.  If you can't offset, it would likely be a large blow to your ratios and you may not be able to qualify for the loan you are trying to obtain. 

The limitations mentioned above I believe are correct.  Ability to take rental losses phases out at higher AGIs. 
 
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it the grand scheme it is not that big of a loss, i'd take the loss of down pmt and sell and move on.  you don't want to be a landlord - it sucks!!!  people trash your place and it costs you money and headache...
 
I don't care how much you make and if you can afford to come out of pocket $850/mo, that adds up and when you add in vacancy that cost goes even higher.  That being said, I would sell it and move on.
 
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