To sell or not to sell... Owning condos long term.

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I've got a condo that I could sell for quite a decent amount (EDIT: Thanks Realtor 1 for the estimate!), it's probably doubled in value in the 14 years I've had it (lived in it initially, rent it now). So there's some appeal to selling.

As a rental though it is also great, by FAR my favorite rental place. Cashflows amazing because it was purchased pre-runup. Condo board seems to have its stuff together, low maintenance, rental price means it's far easier to get good tenants, I enjoy renting this place. I'd be fine with keeping it forever and just having the rent be pure income when it is paid off.

So in trying to make a sell/no sell decision, there's probably some factors I'm not familiar with I should probably think about.

Owning a condo long term, does the risk increase? One aspect would be the board and its reserves for dealing with future repairs, how does one go about evaluating that? Or is the prevailing wisdom that owning a condo long term is more risky even with a good board?

I guess I'm asking what kind of things should I be thinking about beyond a simple numbers / market point of view that could influence when to sell.

[Travis Munroe]

Risk is not much more than when the complex is brand new. Browse through your reserve fund study and financials. Are they putting things off and cash is tight or is there a healthy reserve and everything is being done on schedule.
Often a 30 year old building can be safer than a brand new one in terms of condo fees and maintenance. The building has proven itself for 30 years - I almost look at it as a company. It is a company with 30 years experience, 30 years of book keeping, etc. There shouldnt be any major surprises and the reserve fund should be healthy.

[I-Hate-Hulse]

I think you've going through the right factors. Quality of Condo Board is always tops on my list. A good board making the right decisions is the key to *everything*.

Reserve fund is next - scrutinize the boiler and elevators hard - most special assessment are for this, barring gross builders negligence for mold like you find in some new builds. Have they got enough?

After that - what's your end game? To hold till you die as an income generator? To sell when it hits a certain price? To move parents into eventually? Have a goal in mind it'll make your decision that much easier.

If it involves renting for a while - it becomes a business decision - look at it that way. Is it easy to rent out? Is it attracting low maintenance tenants? Is it worth upgrading to try and attract a better class (and higher rent) of tenants? Is it in a desirable area with capital upside in your time horizon?

More importantly are there any dark clouds on the horizon to all of the above?

[Travis Munroe]

Edit - too direct on advice / personal opinion

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Originally Posted by I-Hate-Hulse

After that - what's your end game? To hold till you die as an income generator? To sell when it hits a certain price? To move parents into eventually? Have a goal in mind it'll make your decision that much easier.

I think hold as income generator is pretty much the intention, with maybe moving back into it in 20 years. Though having it does offer flexibility in other areas as well.

Originally Posted by I-Hate-Hulse

If it involves renting for a while - it becomes a business decision - look at it that way. Is it easy to rent out? Is it attracting low maintenance tenants? Is it worth upgrading to try and attract a better class (and higher rent) of tenants? Is it in a desirable area with capital upside in your time horizon?

We have a number of properties and it is by far my favorite, good questions.

Originally Posted by I-Hate-Hulse

More importantly are there any dark clouds on the horizon to all of the above?

Yeah that's what I'm trying to figure out, good suggestions I'll have to do some work on the reserves side of things.

Elevators we're "lucky" I guess since they're all being replaced via insurance due to the flood, resets the clock on those.

Realtor 1 read your post before you edited it, I tend to agree.

[GGG]

I think from an investment perspective saying it is cash flow positive because it was bought before the run up is a flawed way at looking at it. I think you need to look at it from if you sold this property could the capital produce more money in an investment elsewhere. Of course anything pre boom will be way cash positive but that doesn't mean its a good investment.

As far as Condo risk goes i agree with the above that if the reserve fund study has reasonable values for things like re-siding / re-furbishing exterior, boilers, Elevators, Windows and Doors if they are included in the boards responsibility. If those big things have realistic values then you should be okay.

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Originally Posted by GGG

I think from an investment perspective saying it is cash flow positive because it was bought before the run up is a flawed way at looking at it. I think you need to look at it from if you sold this property could the capital produce more money in an investment elsewhere. Of course anything pre boom will be way cash positive but that doesn't mean its a good investment.

Good point, can't compare it to "no investment" but to an alternative investment.