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I have a job offer in a different city. I currently own a condo that I may return to but that would be really nice to have as a hub for returning to visit family as well as I have a family member who after a divorce stays at my condo to visit her child.

I have a loan on the place for <3 percent interest and it's not super expensive (mortgage 560 + 130 condo feeds monthly, 120 gas/electric)

Would it be silly of me to keep it for a few years mostly unused and consider it an investment? I expect to be able to sell it for more or equivalent value at some point.

I plan on renting in the new location.

How much should I consider leaving the condo vacant as costing me? 120 a month in lost costs? Or should I consider paying for principal on the mortgage as an additional cost?

It seems to me like people do this for vacation homes. What, if anything, should I consider when making this decision? I've also been told it's a sellers market and now might be a great time to sell.

On an emotional level I think I would like to keep it vacant for personal use. But I would like to know just how much I am paying for this benefit.

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    Why not rent it out? – littleadv Jun 13 '13 at 21:05
  • I would like to use it from time to time. I will be far away so it seems hard to rent it month by month. – madmik3 Jun 13 '13 at 21:06
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    Is the condo in a location close to a lot of businesses? I know people who rent furnished condos as "executive rentals" for medium-term visitors or relocated employees (2 weeks to 3 months). Cheaper for the businesses than hotels; gives the visitors someplace more like "home" to stay. If there's a market for than kind of thing, you could conceivably use it to reduce the carrying costs (or, less likely, make a profit). You'd probably need to pay a management company, though. – Rick Goldstein Jun 14 '13 at 18:10
  • Similarly, there's homes-as-hotel companies like onefinestay or Vive Unique, which may give you the flexibility you need, while potentially making a profit. – Steve Melnikoff Jun 19 '13 at 12:20
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Where are you getting $120 from? The cost is 560+130+120= $810

If you'd like to subtract the principal, that's probably ok, it's really the interest that's a 'cost.'

Yes, people do this for vacation homes, and they fall into a few categories

  • those who have a family home they inherited, so they are not paying attention to the lost opportunity of the return on investment
  • those who use the home weekends and much of the summer, so they choose this over renting
  • those with so much money (think the etrade commercial from the '99 bubble) they don't do this math.

If you didn't own this condo, would you rent one in this location, or find a place to stay when you visit? Either way, you are now paying for two living spaces.

  • But paying down a mortgage is not the same as just spending money as it will be recuperated when the house is sold. Additionally the money going into the condo association increases the worth of the property. Why shouldn't those things be taken into consideration? The 120 is heating/cooling. Things that won't accumulate value. – madmik3 Jun 13 '13 at 23:31
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    Yes, I said principal payments are ok to set aside, as they are balance sheet neutral, not really a cost. They are cashflow, however, which is my cause for a bit of hesitation, and "probably." Condo fees add no value, they are maintenance. – JoeTaxpayer Jun 14 '13 at 0:04
  • Thanks. I think that is how I was looking at it. I can also estimate how much I think the property will increase in value. I doubt it will cover the remainder but I think it will matter. – madmik3 Jun 14 '13 at 0:16
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You can't ignore the principal and fees.

If you want to get a car loan, they will count the principal, interest and condo fees as part of your committed monthly expenses. The fact that 10 or 20 years down the road you can get the principal back will not impress them.

The condo fee related to operations is a cost you will not get back. Some of the fee for capital repairs may never help you if you sell before the repairs are done.

The condo is a risk and liability. The heater may die and you will have to pay for it. The builder could have put on a shoddy roof and your condo fee is now tippled. If too many other owners rent their units it becomes difficult for a buyer to get a loan. Thus making it hard to sell. Or the market could drop for condos in that part of town and it can take 10 years for the market to come back.

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Another point to consider is how much will it cost you to rent a hotel room or even a condo when you are in town? If over the course of a month and year, if that cost is more than holding cost of your condo, then by all means don't rent it out. However, if the holding costs are more than what you would spend on housing when you are in town, the you should consider renting it out.

This isn't even taking into consideration the potential positive cash flow that renting your condo out could produce or any potential tax advantages for passive income. Even if renting out the condo is a negative cash flow situation, I think that the cost of renting a hotel room or condo when you are in town would be much less than $700 a month (no electricity expenses).

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