Stuck in an underwater condo in East Boston he is weary of, Beantown-dan is groping desperately for an escape hatch.
He figures he can now finally afford a modest home in the suburbs, but can't easily get out from under the mortgage on his Eastie condo, which is $20,000 to $30,000 above the current market value of his unit.
Beantown-dan is thinking of renting out his condo and then trying to buy - which might get him out of his current jam but would put him on the hook for even more real estate debt.
Right now, though, he feels "trapped." Here's what Beantown-dan had to say the other day on the comment boards.I'm about $20k - $30k under on my condo at this time. Bought right at the mount Everest peak in 2006 in East Boston. I did a no down payment 80/20 mortgage, so in theory I could consider the $20-30k as a lost down payment if I were to try to sell now. Luckily I was able to refinance the 80% mortgage and reduce monthly payments by almost $300. The problem now is that I've outgrown the condo and can afford a modest house in the burbs, but feel trapped. My condo has been rising in value this year (finally) but so are the houses I'm looking to now buy. It's looking like I may have to rent out the condo for a few years, but don't know if I'll have trouble buying a new home with the existing condo mortgages.
So what's an underwater condo owner to do?
While condo prices may be edging up again in East Boston, it could be years before the market will support the price that Beantown-dan shelled out at the height of the market in 2006.
Of course, Beantown-dan could always rent his condo out and go and buy that modest suburban home he has been dreaming of, but that option also includes some potential pitfalls.
Suddenly he will be carrying two mortgages, not one. Of greater concern, Beantown-dan will be adding a new, 24/7 job to his life, that of landlord.
It's a route Hammerstud took, and, after reading his comment, I can't say I am fully sold on the idea. If you lose your tenant as he has, then you can suddenly you find yourself in an emergency situation.
Hammerstud is taking consolation in the fact that the house he bought a year ago is now supposedly worth 14 percent more. In a market where buyers believe they are entitled to a bargain, not sure you can take that to the bank.
Here's what Hammerstud had to say:
I'm in the club....and definitely because I didn't put anything down.....paid $104,000 in 2007. Currently worth 70-80K......and I owe 96K. Have since bought a house and was renting out the condo and making some profit. Then had to evict the tenant so I guess I'm stuck with the place until the area rebounds but at least I can make some money renting it out assuming I can find a decent tenant. On a positive note the house my wife and I bought nine months ago is worth 14% more than we paid according to the recent appraisal for our refi :)
The author is solely responsible for the content.