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Changed asked in Business & FinanceRenting & Real Estate · 2 years ago

Sell or Keep Investment Condo?

I purchased a small condominium some yeras ago and have been renting it out for the past 4 or 5 years. I'm currently conflicted on whether or not to sale. My primary reason for wanting to sale is because the Association has been riddled by embezzlement and corruption of the Board for decades to the tune that there are very little reserve funds that would not cover a major breakdown. Its very difficult to get other owners involved and no one wants to volunteer to be on the Bard which is an absolute necessity to carry out day to day activity according to regulations and bylaws. This is all while the exterior and maintenance is deteriorating.

The conflict comes in because my CAP rate is currently 16 percent which is fairly high.

There has been been at least one other Management company that ended their services with the Association because of all of the difficulties and I'm concerned that the Association may be headed toward lawsuits and ruin.

Should I sell or keep this condo?

7 Answers

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  • Slumlord
    Lv 7
    2 years ago
    Favorite Answer

    Cap rates for individual units and cap rates for multi-unit buildings are not the same thing, at all. A 16% cap for a single unit really isn't so special, and I don't think you'd have much trouble getting that with a different single unit that would not carry the condo problems but it would still be a lot of effort getting into a new place.

    Additionally, sounds like you may be looking at a special assessment down the road, if it was me, I'd go ahead and sell if the tenant isn't great or if they leave.

    However, if you have terrific tenants and no real problems other than the condo board (and a 16% cap to boot) then maybe just hang on and eat the assessment if it happens. It may be painful if it occurs but still may be worth it for the right place.

  • Beverly S
    Lv 7
    2 years ago

    I would sell before values decrease.

  • babyboomer1001
    Lv 7
    2 years ago

    Selling it would pass on the bad board to new owners and you will have to disclose that problem to the new owners. However, it might be a good idea to sell and buy one elsewhere, especially since the other homeowners don't seem to care.

  • Slickterp
    Lv 7
    2 years ago

    Good luck selling a condo in a deteriorating building that has no reserves.

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  • Mark
    Lv 6
    2 years ago

    I think you've made up your mind. Sell. How is the market? It's slowed to a trickle here (upper Midwest) with winter looming.

  • Anonymous
    2 years ago

    I'd sell while the getting out was good.

  • Anonymous
    2 years ago

    It sounds like a hot potato: better let it go.

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