QUOTE (DavidSandbrand @ Feb 28 2009, 03:23 PM) Hi Dirt,
- It looks like the average home in Charleswood is listed for between $400k and $450k right now. I`m not arguing your valuation of the property (in fact you don`t say what it`s listed at), but if it`s been listed for six months with no offers, changes are that it`s priced too high.
- You mention that a compatible home has been on the market for a year and is selling for $480k, but it sounds like that might be the asking price, not a sale price. Again, if it`s been listed for a full year, it`s probably over priced.
- Find a new realtor. there are hundreds of them, and many are great. Find one that fells you things that you don`t like to hear, since chances are that realtor is being honest with you and not stepping softly around your expectations of a sale price. Also keep in mind a listing contract can be very short if you want it to be, so you don`t have to get stuck with another bad realtor for six more months.
- Maybe it could be turned into an executive rental? that would drive cash flow up while you wait for the market to turn. tough to do if you have tenants in there now on a least though.
- Have you reduced the payment on your variable mortgage? that might save you that $600/month.
I hope that helps.
Dirt,
Some very good points have been raised that you should take into consideration.
Fundamentally, having negative cash flow properties is not the way to build a real estate portfolio.
At REIN, Don teaches us that these negative cash flow properties are alligators, because they eat away at all your money, and will eat you alive.
You need to build your real estate portfolio with positive cash flow properties, because it is these properties that will continue to cash flow through the good times and the bad.
If you are able to somehow convert this property into a positive cash flowing property, this is a good thing. Examine carefully all of the input previously mentioned in this thread.
If you are not able to change this property to a positive cash flowing property, it really does not make sense to keep it. If you are stressing out about it, and the $600 bucks a month out of your pocket is keeping you up at night…get rid of the property, and move on.
David raised some good points:
If there is a demand in your market for Executive Rentals (fully furnished accommodation), consider converting this property into one. In this scenario, you would be able to substantially increase your monthly rent.
If you have an open variable rate mortgage, have your monthly payments been adjusted downward in step with the decline in the prime-lending rate? If not, contact your lender, and have them readjust the payment.
Also, if your mortgage is currently amortized at 25 years, consider changing the amortization to 35 years.