Should We Offload Our #1 Mistake??

As many of you know, our #1 financial mistake was the purchase of our home back in 2007.

Not only was it at the peak of the bubble, but we bought it with no money down, no budget, and the 2nd worse crime of all: on a complete whim. (We literally took a wrong turn on our way to check out an apartment to rent, and 48 hours later we had a house to our name *facepalm*).

The first crime? Buying it because everyone else was. You know, the whole “American Dream” thing.

Every last person I knew either owned a home, or was in the process of settling down and picking one up, and having been freshly engaged to my future wife I thought, “this is the natural next step, right? Who cares if you weren’t even thinking about buying a home this morning. Everyone else figured out how to afford it, you will too!”

Well, it turns out it’s not for everyone. While we were fortunate enough to be able to afford the place and not get into too much trouble over it, the fact was we shouldn’t have done it. Or at least spent more than two whole days thinking about it :)

Home ownership is no joke. Unless your plans include living in the same home for 7+ years (my didn’t) or you enjoy the ability to “own” something and tweak it to your liking (I thought I did, but turns out that’s not really important anymore) you should probably stick to renting. Even if people say it’s “throwing money down the drain.” That’s not always true, and plus those people don’t matter anyways!

What does matter is your happiness. And sometimes that means not following the crowd as crazy as it may seem. Some of the most popular (and financially free!) money bloggers don’t even own themselves – JL CollinsGo Curry Cracker, Mad Fientist and plenty more. In fact, when I shot Mad Fientist a note about writing this post, he sent me back the following:

Mrs. Fientist and I currently rent a furnished apartment and we’re absolutely loving it!  We’ve owned and sold two houses so far in our lives and I don’t know if I’ll ever buy another place to live in.

Since our current apartment is furnished, we could literally pack up less than one carload worth of stuff and move out.  It’s extremely liberating and I’d gladly throw a tiny chunk of money away every month (which isn’t really the case because I’m getting something important in return for that money – shelter), than potentially throw a LOT of money away in real-estate commissions, maintenance costs, legal fees, and opportunity cost of having a big chunk of my money invested in an asset that underperforms the markets (which is exactly what happened with our last house and with most houses, if you look at the historical figures).

I’m actually trying to take it to the next level and just use my travel-hacking skills to live out of hotels and airbnbs very cheaply all over the world but I don’t think I’ve got the Mrs. convinced yet :)

Point is, renting doesn’t make you an idiot. Living someone else’s life does.

And while I’m still inching back to living my own life again, it got a whole hell of a lot better once we got out of our house and started renting again – making our old house a default rental property (and a rental property that loses cash every month at that – d’oh).

But what’s done is done, and we now come to a crossroads I need your help with!

We got a notice from our renter recently that they’ll be breaking the lease due to military orders that came up (something you’re legally obliged to comply with, penalty-free (and rightfully so)) so now we have a few weeks to make a tough decision:

Do we find a new renter, or sell it once and for all?

It’s no surprise that my heart is saying DUMP DUMP DUMP! Haha… But logic is telling me to slow down and go over everything as to not make another heated decision in the moment ;) And y’all know how much I love following my emotions.

So this is my chance to hear outside opinions from people who know me (and my wallet) the most. I didn’t have this blog when I took out out that loan for $360k back then (though it did prompt the creation of this site – so I can’t hate on it too much), but I have it now and I’m calling in a lifeline :)

Here’s the general state of affairs, financially:

  • Purchase price: $360,000
  • Possible sales prices: $280,000 worst case, $300,000 more than likely, $320,000 if the lottery strikes (we’re taking a loss no matter how it pans out)
  • Amount still owed: $290,326.04
  • Costs to offload: $20,000-$30,000? (Will need to double check w/ realtor…)
  • Amount of cash we have on hand: $27,228.32
  • Amount losing each month w/ renter: $600’ish (difference in rent vs mortgages + maintenance + homeowners association + property manager fees)

So best case we walk away with $10,000’ish if we sell and no longer bleed $600/mo, and worst case we need to come up with $40,000+ to seal the deal, but we still get to stop the bleeding every month. And more than likely it’ll be somewhere in the middle.

There’s also the tax implications to everything as we’d be getting rid of our yearly loss write-offs, but obviously a $0 loss is better than LESS loss ;) (Another crazy thing people like to say btw – “Don’t pay off your mortgage, you’ll lose your write offs!” If you’re not paying it down, hopefully it’s because you’re paying your other – worse – debts first or investing your $$$ elsewhere…)

Now if we continue to rent it out, we still bleed the money each month, but also don’t have to deal w/ all the hassle and coming up with a chunk of money from all the fees. Not to mention that *eventually* it would become a cash generating property as we’re paying extra towards the principal each month, though quite some time away. On the other hand, it would still cost us to have our property manager vet a new renter all over again and get them through the door, so we’re not coming off scott-free no matter which route we choose.

(And before you say it – we’re not getting rid of our property manager as they’re a God send! Haha… Costs some money, but saves so much time and patience with everything, especially while living in different states. For us the $$ is worth the trade off of being on call 24/7…)

Here’s the full list of pros and cons…

Pros to selling the house

  1. Freedom!
  2. No more worry/headache
  3. No more bleeding of $$ every month
  4. No more anxiety any time a call/email comes from the property manager
  5. No more feeling like you have an extension of yourself somewhere. And far away at that.
  6. No more having our largest $$ mistake on the books!

Cons to selling our house

  1. Big chunk of cash out the door
  2. We’d be selling it at a loss
  3. We lose any chance of turning it into an extra income stream over the years
  4. It’ll take some bandwidth to get it prepared and cleaned up and ready to be shown properly
  5. It might not be the best time to sell as the market hasn’t fully recovered/improved?
  6. And, in a weird way, we’d lose our back up home if the $hit ever hit the fan

So pretty much the emotional side wins in the pros, but the financial effects take the cake in the cons. And just for fun, I plugged in the house into all those shopping/selling tricks from over the years just to see what my gut reactions were. They were pretty telling:

Which decision makes you the most excited? Selling the house!

Would you buy this house again right now? Hell no.

What would you rather have, the house or cash? Cash! (If it were an option)

Would you move right into this house the second you bought it? No. (This trick is more about deciding which clothes to buy or not (if you’d wear it right out of the dressing room, buy it! If you hesitate, put it down.) but figured I’d swap in the house just to see what would happen :))

So obviously you know which way I’m steering ;) And in all reality, we’ll be okay whichever route we end up taking, but of course you always want to set yourself up for the best possible option.

Last week I was gung-ho with wiping our hands once and for all, but over the weekend the doubt has started to creep in… After all, it could totally wipe away our cash! Maybe it’s better to wait another year until we’re more stable? Or at least until we get our 2nd income again?

So much to consider, but it’s time to stop and get outside opinions now…

What would you do if you were me? Sell and be free, or rent and suck it up?

Here’s our latest net worth if you need more financial info, but pretty much looking for first reactions here and any insight from your own experiences you could bestow upon me. I’m good at a lot of things, but making home ownership decisions I am quite obviously not ;) HELP!

UPDATE: Thank you guys so SO much for all the comments and emails and messages! You’re so good to me! I’m reading and considering each and every one of them, and just so thankful for the killer community we’ve got here. Really appreciate the time  you’ve spent sharing your opinions with me, and I absolutely love y’all for it. THANK YOU SO MUCH!

UPDATE #2: We decided to put it on the market :) WISH US LUCK!!


PS: Did I mention I hate home ownership?

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  1. Lucas September 28, 2015 at 6:11 AM

    Worst case you would be $40000 to earn $7200 a year? that looks like a 18% yearly return on investment to me. Leverage is way over rated. Obviously no one can predict where the market is going, but i don’t think it is it going to go up a ton in the next couple years with interest rates rising slightly over that time as well.

    Sounds like most of your Con’s are “loss aversion” because the property went down in value from when you bought it and you still hold onto the hope of it returning to what you bought it at. To make a logical decision you have to completely forget what you bought it at as that has no barring on the future at all. Instead look at where you are at right now and determine if the appreciation rate on this home plus the rent i am getting is worth the sunk capital. If not, then you should probably sell it (which looks like it makes sense to me).

    1. Jim Wang September 28, 2015 at 9:20 AM

      Sounds like J should point the loss aversion spotlight on the $600/mo and use that as motivation to sell the house. :)

      1. Dividend Growth Investor September 28, 2015 at 10:04 AM

        I think I had asked this questions before, but at what stage is it worth it to refinance the property? I think J Money is paying a high interest rate. If that loan were refinanced, I wonder if/how the cash-flow situation would improve.

        ( I forgot the specifics and cant find them on the site, so sorry for asking the question again)

        If this were a good company, I would say dollar cost average into it. If this is a bad company, then you should not add money and possibly sell

        1. J. Money September 28, 2015 at 11:36 AM

          Great point guys!!

          As an emotional type of guy, I’m def. attached to the past’s #’s :)

          As for refinancing, no can do unless I pony up at least $50k for a down payment as I’ve got hardly any equity. And at that point I might as well sell it. (Great question though – it’s a common one as I agree the % is high! we refi’d 4 years ago from 6.875% interest-only to a conventional 30 year, and the route we took to make that happened prevented us from re-fi’ing again in the future. Though of course it was worth it :))

  2. Slackerjo September 28, 2015 at 6:15 AM

    You wrote “big chunk of cash out the door” which is true but because of your diligence with your finances as well as your youth, you are in a position to take a hit and still in the long run, not be overly affected by it. I am sure you know, but you are not going to hit a financial home run every time you try something. There’s gonna be strike outs (hey, I’m in Canada, we’ve gone baseball mad).

    1. J. Money September 28, 2015 at 11:36 AM

      that’s the damn truth right there. and I struck out the first time at bat – hah!

  3. Mark@BareBudgetGuy September 28, 2015 at 6:36 AM

    “Renting does not make you and idiot” – J Money. As I’ve been in my first house for 3 years now, I’ve been feeling more and more like home ownership is overrated, but I always suppress that thought because we’re not “supposed” to feel that way. You’re post has officially liberated me from that suppression.

    1. J. Money September 28, 2015 at 11:38 AM

      Good! I’m glad!!

    2. Alyssa September 28, 2015 at 7:56 PM

      Amen! I’ve owned my home for two years and can’t wait to sell it and move back into an apartment (I’m renovating it now to sell in the next couple years…thank my Dad for talking me into this “good idea”). All my friends renting are jealous that I own my home because I can do “whatever I want to it.” But I also have to pay the yearly property taxes, call a plumber on a Sunday because the only toilet backed up into the tub, deal with a leaking fireplace, and the somewhat crazy neighbors. I agree that we’re “supposed” to want to own a home, but I can’t wait to leave all those problems to the landlord!!

      1. J. Money September 29, 2015 at 4:42 PM

        One day soon!! Better to learn this now than later too, which I’m super thankful for.

  4. whiskeytrail September 28, 2015 at 6:39 AM

    My two cents is this, 1-what does your gut tell you to do 2-what is the long road effect on financials and more importantly your/family state of mind/health when dealing with this 3-do you plan to move back to that area and need a place to stay 4-how much of a pain in the back side is this causing/have caused?
    Yes real estate can make you a lot of $$$. But everything you’ve stated over the last few years plus this article tells me yall wish it was gone.
    I think Lucas stated it pretty well.
    Anyways, with my opinion and a pot of coffee, I can solve all the worlds problems, hehe. Good luck.

    1. J. Money September 28, 2015 at 11:41 AM

      great questions!

      1) my gut says to sell
      2) long-term effect – I think it can go either way (positive or negative) but prob better odds negative
      3) def. do not plan to move back to the area so long as I can help it!
      4) it’s kinda one of those pains that are always there but you’re used to it, and then every now and then it flairs up, haha…

      this helps thinking/typing them out :)

  5. Chris Muller September 28, 2015 at 6:40 AM

    Your last point should seal the deal for you – you hate home ownership. From the way I’m reading the article, there’s an undertone of “I want to sell it”. If you want to get rid of it, I think you should. It would rid you of all the headaches you’ve described, plus detach you from any emotional investment you might be clinging on to.

    If it were ME though, I’d hang on. Lucas (the comment above) makes some really great points. You can’t predict what the market will do. You’ve already bought the home, so think of it as a sunk-cost. You have a property manager and it’s generating some positive cash flow for you. Again, if it were ME, I wouldn’t sell it. But I also am emotionally detached from the situation.

    I know you’re looking for advice from your readers… If I had to give you advice, I’d say do what is right for YOU. Whatever you decide, though, make the decision and don’t look back with regrets. Good luck, sir!

    1. Lucas September 28, 2015 at 1:20 PM

      If it were generating positive cash flow that would be a different story. But based on the numbers it looks like it is generating -$600 a month. That is a pretty big hit on a yearly basis.

      1. Chris Muller September 28, 2015 at 8:23 PM

        Damn these 4:45 wake-ups. I missed the negative sign! If you’re losing 6 hundo a month based in everything else you’ve laid out, I’d unload that pig.

  6. K September 28, 2015 at 6:43 AM

    If I was you, I’d sell.
    The house wasn’t originally purchased as an investment property, and you’re losing $600/month on it. If you want an investment property, it might be better for you to get rid of this one, and look at picking one up that you’ve actually analyzed for this purpose.
    If you do consider this your first big mistake, it might be completely worth it to put it behind you and move on, instead of having to deal with it on a daily basis. There are benefits to a clean break, rather than having a daily reminder – same reason lots of people can’t be friends with their exs, at least not right away.

    By the way you’re phrasing the options – sell and be free (positive) or rent and suck it up (negative, settling), it sounds like you’re ready to wash your hands of this. There isn’t really a wrong decision here – you’re taking the time to thing about it, so as long as you’re ready to own your decision, which ever one you make will be the right one for you.

    If you guys do decide to sell, take the time to spruce up the place, and stage it. You’ll end up minimizing your losses.

    1. J. Money September 28, 2015 at 11:44 AM

      haha yeah – this is def. skewed to “selling it”. I was trying hard to make it more comparable but had a hard time doing so ;) Just didn’t want to pull the trigger on something quick like I did back in the day that got us into this mess. So appreciate hearing y’alls thoughts!

      (and you’re right – we became accidental landlords. would have been completely different had we bought the property as a rental from the start!)

  7. Emma | Money Can Buy Me Happiness September 28, 2015 at 7:31 AM

    How timely. I’m just writing a huge post about all the things I’ve done wrong as a real estate investor. So I know a bit.
    Firstly this is not home ownership. You are now a landlord/real estate investor. Don’t get emotional. This can only be about the figures. So your worst case scenario is a 40k loss that you cannot capitalise into the loan – you actually have to pay that out in cash? Is $600 a month your loss after all tax writeoffs?
    If I were you and staring at a 40k loss just to be rid of an under-performing asset (I’m loathe to say non-performing because you make money when you buy and you paid too much, as you already know) I’d be thinking of how I can make that asset perform better. Can you add an extra room or convert the basement into a separate apartment? Is there a more economical way to reduce that $600 per month loss by increasing the rent until the market improves?
    What are the economic indicators like in the area? Is there potential for capital growth in the long run? New employers moving into town? Schools, shops, infrastructure improvements? Or is it an area that won’t likely gentrify in the future? Only you know these things.
    I own a dud rental, in a one horse town. And I would give my eye tooth to be rid of it, but whilst the rent is being paid I just cannot take the hit of that huge cash loss.
    If your renter wasn’t moving out, would you even be thinking of selling?

    1. J. Money September 28, 2015 at 11:47 AM


      I haven’t thought about it as purely the investment route, which technically it’s supposed to be. to me it’s always been “our house” which is clearly not the case any more. So thanks!!! Great comment!! (and no – I wouldn’t be thinking about selling it if the renter wasn’t leaving, though we do briefly every time it’s up for renewal)

      1. Emma | Money Can Buy Me Happiness September 28, 2015 at 4:30 PM

        Oh I totally get that, whenever I have a change of tenants (renters) and it takes some time to find new ones I get nervous. Even after 8 years of doing this.

        I get that it’s hard to not think of as your house anymore – but the truth is your home is where your family rest their head every night. Sounds like renting is working for you guys, We rented for nearly a decade whilst building up our real estate portfolio. I love renting – I intend to be a renter in the future and only hold property as an investment. The flexibility goes hand in hand with the FIRE lifestyle.

        1. J. Money September 29, 2015 at 4:46 PM

          Agreed! I’m all about that FIRE, about that FIRE, about that FIRE (to the tune of “all about that bass” haha…)

  8. Allison September 28, 2015 at 7:34 AM

    I won’t repeat or rephrase all the fabulous comments already given, but let me offer a tactic: rewrite your article but do it in favor of keeping the house.

    You are a great writer, and I daresay once you get going, you will get on a roll with it and put yourself in the mode of finding the good reasons to keep it. THEN step away for a few days, don’t even think about the house, and come back to decision-making. Without this little role-reversal, you’ve really already made your decision.

    1. J. Money September 28, 2015 at 11:49 AM

      good idea!!! wow… you guys are so smart, haha… love you all.

  9. Matty B September 28, 2015 at 7:35 AM

    “…know when to fold ’em” – Kenny Rogers

  10. Ragdoll September 28, 2015 at 7:41 AM

    I’d just like you to take into consideration any tax benefits you might have with selling the house even at a loss. I’ve heard of people make up their losses of selling their house via taxes. So much even if you were to lose some cash, you might be better of selling after all!

    1. J. Money September 28, 2015 at 11:51 AM

      yes – i need to run it by my accountant still, but i’m pretty sure we’d be able to benefit from the losses at the end of the year. The last time I brought it up earlier in the year – just out of curiosity – she mentioned it would help, though of course much better to be taxed on proft ;)

      1. HD September 28, 2015 at 2:02 PM

        Be sure to look at this very closely. When you converted to a rental property your basis for tax purposes was set at value of house (not land) at that time. That value has likely gone up so you *might* find yourself with taxable income. I am actually in the exact same position as you debating this for the spring (I’m strongly leaning towards selling) but this answer will be very pertinent to my decision making. Good luck!

        1. J. Money September 29, 2015 at 4:47 PM


  11. The Creepiest of Pasta September 28, 2015 at 7:47 AM

    Hey J$,

    From looking at your figures and the way it comes across in reading, I say cut your losses and make the $10,000 and stop bleeding the $600 a month. You have spoken before about the psychology of “whats best for you mentally” rather than “what is the best idea financially”. And I would say the financials dont work out anyways, so cut your losses and sell the place.

    Much Love,

    The Creepiest of Pasta

    1. J. Money September 28, 2015 at 11:53 AM

      Well if creepy pasta is telling me that I have to listen! Haha… (and have to go click on your blog too, of course ;))

  12. Natalie @ Financegirl September 28, 2015 at 7:51 AM

    Dang. Damn houses. That’s why I don’t let anyone convince me I’m stupid for not buying. But anyways, for you, I would keep it. The loss is too great for me personally. In a few more years, then maybe yes I would. But like you said, it’s a personal choice. You have to feel comfortable with what you’re doing. I’m sure you’ll make the right choice for you and the fam.

  13. Chadnudj September 28, 2015 at 7:53 AM

    So have you talked to a real estate agent? Or not?

    Because you seem to have this idea of what your home is worth, but then say you need to check with the realtor on the costs to offload it (which I think you have seriously overestimated, but I could be wrong).

    First step is to get all the information necessary to make a decision. For all you know, your area is in the midst of a huge increase in prices/demand (meaning selling could be a better option). Or rental prices have greatly increased in the months/years since you first started renting it out (this happened to me on my rental….I lost a longtime tenant, and found out I could actually charge 33% more per month in rent because of changes in the market, turning a money losing rental into a money making rental overnight). A good realtor could tell you both these things. I’d also talk to a tax professional — losses here can/should be harvested to reduce future/current tax burdens, so you’re going to want to know the best way to do that if possible.

    My head says to keep renting it — rental demand is high nationwide driving rents higher, presumably you have as low a mortgage rate as possible right now (if not, refinance if possible!), appreciation should happen/continue on your property (the real estate crisis was pretty unprecedented….most of the time, real estate appreciates steadily albeit unspectacularly), and odds are you should be able to increase the rent and find someone who can pay it to turn this into a money making rental. But the numbers may make selling much more palatable…..

    But regardless, I’d get some more information on rental rates/comparable sales in your area before making a decision.

    1. J. Money September 28, 2015 at 11:56 AM

      Yup, for sure. Next on my list is calling and confirming w/ realtor (we’ve talked on and off about it over the years so I have an idea, just not an exact one) and my accountant (who I’ve also talked on and off about it…).

      I’m def. not making the same mistake last time in just “going with the flow” – hah.

  14. Kalie September 28, 2015 at 7:54 AM

    I’d sell. You obviously want to, and reason in favor #1 (freedom!) is a big deal. I agree that the sunk cost isn’t very relevant at this point. Even it costs you money to sell, there’s something discouraging about the prospect of losing money on it every month for years to come.

    1. Jack September 28, 2015 at 7:23 PM

      +1 for the sunk costs aspect of the problem. It’s not about what you doesn’t in the past but in what’s the best allocation of your resources right now. If you’re losing money with no turnaround plan, and you have a better use for the money, sell. Otherwise, come up with a better plan. The annual losses vs the costs of selling and price risk are pretty much a wash. No point making a move until you know what that move should be.

  15. Divine September 28, 2015 at 7:55 AM

    Sell and be free :)

  16. Lance Cothern September 28, 2015 at 7:56 AM

    Hey J! Personally, with all of the negative energy you guys have in that house, I’d get rid of it. One less thing to worry about/tie you down. That could release more energy to make more money!

    One thing you may want to look into is depreciation recapture. It’s been a long time since I dealt with it and I don’t think you have to pay it if you’re selling at a loss, but just make sure. There is nothing worse than a surprise tax bill.

    1. J. Money September 28, 2015 at 11:58 AM


      And I love your idea btw in your email you just sent me about listing it on the market, and then renting it out if we don’t get any decent prices. That seems like a great plan to hedge our bets actually. I don’t think i could stomach selling it at $280k even if we did get an offer that low, so I appreciate the idea!

  17. Pengepugeren September 28, 2015 at 7:56 AM

    By “home ownership” I’m thinking that you own your home, and I’m a big fan of that. But you’re not living in the house, only owning it and renting it out at a loss.

    Anyway, forget about the sunk cost. It’s gone. You have taken out a loan in order to own an asset worth around $300k. Would you borrow $300k to buy stocks in ONE company that were currently losing money every month, but may or may now gain value in the future?

    1. J. Money September 28, 2015 at 12:00 PM

      Damn. When you put it that way!

  18. Penny @ She Picks Up Pennies September 28, 2015 at 8:03 AM

    If you hate it, don’t do it?! That’s kind of my litmus test for most things. There are passions, things we tolerate, and things we hate. Avoid the last category as much as possible. Still, that’s a harder decision that I make it seem…especially if your pro/con list comes out more-or-less even. Good luck!

  19. Catina Marie September 28, 2015 at 8:17 AM

    I am renting after homeownership and love it too. If you do decide to sell it, I vote you find a realtor from the Budgets community that will help you “offload” it without taking any commission. You do a lot for your readers and if I were a realtor I’d look at it as a great way to repay you. :-)

    1. J. Money September 28, 2015 at 11:59 AM

      Awwww, thanks!!

  20. Aaron September 28, 2015 at 8:31 AM

    Hey J. Sorry you are in this predicament. I think you are leaning in the right direction – having property is great if you are making money on it and all, but doesn’t sound like that is happening for you. I’d offload.

  21. Justin @ Root of Good September 28, 2015 at 8:36 AM

    Dude, dump it. I don’t even need to run a spreadsheet on it. :) It’s sucking cash flow every month and unless there’s some miraculous change in the rental market and/or housing market, that fundamental sucking noise won’t change it’s tune any time soon.

    Count me in as another one that wouldn’t mind to rent instead of own. But where I am owning is cheaper. And I haven’t been a renter in a while, so maybe my tastes have changed over the years. And like Mad Fientist, there’s the Mrs. to consider. :)

  22. Stefanie @ The Broke and Beautiful Life September 28, 2015 at 8:37 AM

    Ultimately, freedom is hard to quantify, but it’s worth a lot. I hate to sound like the quasi-hippy I am but follow your heart :)

    1. J. Money September 28, 2015 at 12:01 PM

      I’m so down with hippies these days :)

  23. Hannah September 28, 2015 at 8:54 AM

    If you’re losing money every month, then even when it does pay off, it will take about 10 more years for it to be a positive investment. And even then, what will the ROI be? 5%, 4%?

    We sold our first condo at a $25K loss (though we had paid off most of it, so we walked away with $30k) because we had better uses for our money.

    The only thing I would say is if you really will lose $20-$30K in cash, you need to figure out how you’ll pay for groceries, rent and daycare for the next month or two while you build up those cash reserves.

    1. J. Money September 28, 2015 at 12:02 PM

      yeah, I wish I were really good with #’s to figure out how long it would take for it to start generating *positive* cash flow. you’re probably right in that it’s a decade or so away!

      1. Hannah September 28, 2015 at 2:01 PM

        Some easy assumptions:

        Rent increases by 3% per year
        Taxes increase by 3% per year
        Management fee increases by 3% per year
        Mortgage stays the same until you’ve paid it off
        Repairs and “capital improvements” eat up 10% of rent (on average).

        This is how that would look in excel
        Rent Mortgage Taxes Management Repairs Inflow v Outflow
        12000 9000 1500 900 1200 -600
        12360 9000 1545 927 1236 -348
        12730.8 9000 1591.35 954.81 1273.08 -88.44
        13113 9000 1639.1 983.45 1311.2 178.9068

        I mean its really simplistic, but if you are losing 7.2K per year, and you’re going to keep losing at that level for 5+ years, better to cut your losses now. On the other hand if you are losing less each year, and in four years will be to break even, it might be sort of worth holding onto until you are above water.

        No matter what you’ll have low ROI though.

        1. J. Money September 29, 2015 at 4:49 PM

          Love this! thank you! it all helps.

  24. Steeb September 28, 2015 at 9:02 AM

    It has a negative $600 / month on the cash flow. But what about on your net worth ? The house itself has a positive impact on your n.w. as you owe less than the expected value, and with the mortgages going down it increases your n.w. each month.
    If you sell you lose the positive impact to your n.w and you’re out $40k cash from your n.w. as well.
    It’s not like selling gives you cash to invest elsewhere.
    Keep renting it out, I sold my rental property when I lost my great tenant and didn’t want to take the risk of finding another vs getting a loser. I should have kept it.

    1. J. Money September 28, 2015 at 12:03 PM

      Interesting… it would totally leave a mark on the net worth for sure, hadn’t thought about that! though I guess I would have $600 more in cash flow that would start going back towards it again… but up front it would be a big hit.

      This is why I ask you all this – so many great perspectives!

  25. downunder sugarglider September 28, 2015 at 9:03 AM


    BUT ….

    listen to some of the advice given – go and find lots of info about the movement of real estate values in that city – going up or down? what alternative methods of selling to save some fees? what are the costs of selling? capital gains taxes etc? Could you renegotiate the financing? can you afford to do some minor repairs/upgrades to increase the asking price? etc etc

  26. Dee @ Color Me Frugal September 28, 2015 at 9:05 AM

    My vote is sell! We were in almost the exact same position a year ago. Renters moved out and we had to decide to sell or keep our former home, which had lost value since we bought in 2009. We ended up selling last fall for about $30k less than we paid for it. We had to bring $7k to the table to close, but honestly it totally felt like $7k well spent! It felt so awesome to get rid of that house, since it had been dragging us down financially for years. Plus we were able to immediately dump $200k of debt when we got out of that mortgage, and that felt awesome too. Sell my friend!! You will never look back and regret it!

    1. J. Money September 28, 2015 at 12:05 PM

      way to go!

      it would be pretty fantastic to be 100% completely debt-free, I’m not going to lie :)

  27. SavvyFinancialLatina September 28, 2015 at 9:14 AM

    Sounds to me like you should dump it and cut your losses. Remember home ownership should not happen on 24 hour whim.

  28. Will at Phroogal September 28, 2015 at 9:15 AM

    Ever considered doing a private party sale? That would save quite a lot of change – even if you don’t get the absolute top dollar.

    1. J. Money September 28, 2015 at 12:06 PM

      I like the idea of that financially, but I know I would F something up (and wouldn’t have the patience for it) so I prefer to have it done right and just suck up the expenses. I’m always amazed at those who do go it alone though!

  29. Tiffany September 28, 2015 at 9:19 AM

    Are you in any way affected by the shale boom? I live in a shale area. (If I remember right, you’re in Maryland. I’m in WV.) Rent for an actual multi-bedroom house before shale was about $300-400/month (the average yearly wage here is about $36,000). In the blink of an eye, housing exploded. It’s rare to find a one bedroom apartment for under $700. For a house, a person is looking at at least $1,000/month.

    If you have ties to it, somehow, you may want to keep that in mind. With the fracking slow-down due to decreases in prices, housing prices along with rent may start a decline.

    1. J. Money September 28, 2015 at 12:07 PM

      Oh wow!

      No, not in the shale area that I know of at least, but I’ll double check :) That’s pretty fascinating – I remember watching that move on shale stuff – such a hot topic!

  30. Mr. SSC September 28, 2015 at 9:26 AM

    I would say it looks like sell, and I agree huge decisions made on a whim rarely turn out good.
    There are some decisions that affect use emotionally that you can put no value on. Even if you have to bring $$ to the table to get rid of it, do it if you feel less stress and anxiety about it everyday.
    Also, if you’re out $600/mo currently even with renters that is another $600/mo you just freed up to go towards investing in other things that you can be happy about. Just a thought…

  31. Kate @ Cashville Skyline September 28, 2015 at 9:28 AM

    It sounds like you’ve already made up your mind. All six of your pros are pretty convincing on their own! And together, they solidify your argument. I’ve actually encouraged my parents to sell their house and rent to avoid the headaches of homeownership in retirement (ice dams! flooding! woodpeckers! haha) But I don’t think they’ll ever go for it!

    1. J. Money September 28, 2015 at 12:08 PM

      Woodpeckers??? Hahhaha…

      1. Justin @ Root of Good September 28, 2015 at 4:00 PM

        That woodpecker comment brought back a nasty flashback. Before our new vinyl siding and metal trim installation, we had woodpeckers living in our eaves and soffits. Way less cool than it sounds. And they always managed to peck away at 7:30 am on the weekends when we could otherwise sleep in.

  32. chicklus September 28, 2015 at 9:29 AM

    I suggest that you would speak to your accountant first but IMO I think you should sell. We (all of us) seem to forget that there is no such thing as a free lunch. We pay for EVERYTHING we get, including self knowledge. You learned a lot about yourself through this house and that is probably worth more than the money you will lose. The most difficult thing to be is happy and to genuinely like and be comfortable with yourself. It sounds to me like everything you went through with the house has helped you attain this. I think you are already ahead of the game. Sell the house and get rid of the albatross, you have already learned your lesson. There is no reason to hold on to it just because of the money loss you have already gained more than you will be loosing, IMO.

    I am involved (hobby-second income) in buying & selling vintage jewelry. When I went to jewelry camp, yes there is such a thing, One of the people running the camp told us that experience is like college–the first $10,000 of mistakes is freshman year, the second is sophomore year…etc. college. We were very surprised that a very successful person in the antique jewelry field would admit to making mistakes. She said everyone makes mistakes and everyone pays to learn one way or another. I think of this whenever, I make a mistake.

    1. J. Money September 28, 2015 at 12:10 PM


      Without the purchase of that house this blog – or my finances – wouldn’t even be around. I’ve learned so much from that point in life, and glad I failed big earlier on and hopefully won’t again later! haha… at least *that* big, I know I’ll still fail on things :)

  33. Emily @ JohnJaneDoe September 28, 2015 at 9:33 AM

    I think selling is the best thing for you. Rental property isn’t for everyone. It takes a time commitment, and you have to be able to absorb extra costs for repairs and vacancies.

    You say you are losing $600/month or $3600/year. But, in any given year that can double or more due to repairs or vacancies. (just the nature of rental property). Now, the flip side if you sell would be less stress, more time, and an extra $3600/year to invest as you want. You can always put money in a REIT if you want some real estate exposure.

    1. Kacie September 28, 2015 at 4:01 PM

      $600/month loss = $7,200/year. Eep!

      1. Emily @ JohnJaneDoe September 29, 2015 at 8:53 AM

        Whoops. Yep, bad math.

  34. Tiffany @ Face & Fitness September 28, 2015 at 9:35 AM


    It sounds like you’re leaning toward sell – so sell. It really is as easy as that. This house has been nothing but a headache for you (4ish years of reading your blog have taught me that at least! ;) so really, don’t feel bad about unloading it.. You’ve learned your lesson and gotten your financial life in better shape because of it, so there’s some positive coming out of the situation, too!

    The house stinks as a rental (you’re paying someone to rent your house essentially), so keeping it for that reason is just shooting yourself repeatedly in the foot. The loss will be tough to stomach but trust me, in a few months you’ll forget all about it! I lost money on the sale of my house in Charlotte earlier this year (only owned it for about 6 months, yes, super super dumb) – but selling it was really the right thing for me, as it would have barely broken even if I were to rent it. Ripped the old band-aid off which stung for a bit but now I’m ahead of where I was before I sold it, so it’s all good.

    Obviously you know I work in real estate, so full disclosure and all that, but really I think peace of mind and getting rid of the shackles will be well worth it :) Just my $0.02!

    (PS – Homeownership would make a great topic for the podcast with you & Paula, given you are opposite ends of the spectrum! Would be interested to hear you two hash it out! Actually this is making me think… expect an e-mail from me shortly :)

    1. J. Money September 28, 2015 at 12:11 PM

      oh yeah! she has an entire real estate empire going, and I’m trying to get out of that game! we’re the opposite in so many ways that it mashes up just perfectly for podcasting :) now if we can only get it out the door!!! (and thx for your insight too – it helps!)

  35. Tonya@Budget and the Beach September 28, 2015 at 9:43 AM

    If I had to read between the lines my thought is that you really want to sell it. Even if it’s a loss, it does sound like a lot of stress will be lifted in doing so. Sometimes it’s just not worth the money, know what I mean?

  36. Bethany September 28, 2015 at 9:45 AM

    I’ve been in your shoes before.


    I sold my house in May and you wouldn’t believe how freeing it is. We lost about $30k and it was the best $30k I’ve ever spent. Home ownership isn’t for everyone.

  37. Michelle September 28, 2015 at 9:49 AM

    I didn’t know about the house but it sounds like an ex who.just.won’t.go.away. Sometimes you have to go through the crazy tears and shouting to get them believe that you’re over them and their crazy. You’re so over it that you would PAY to get them out of your life to feel free again and never think about them again.

    Ok, I’ve made my point.

    1. J. Money September 28, 2015 at 12:12 PM

      Hahahhaa…. this house is our crazy ex!!!!

  38. Alexander @ Cash Flow Diaries September 28, 2015 at 10:02 AM

    It depends on what your local market is doing right now. If it is not rising or just stable, then yes it would probably be good to just get rid of it and take the loss.

    If the market you are in has been steadily increasing and your home value has been consistently rising lately, then I would hold off a little longer and try and shave off some of that loss.

    Also im confused about how you would “walk away with $10,000’ish if we sell “? It sounds like no matter what the sales price is, after realtor fees, you are in the negative.

  39. connieK September 28, 2015 at 10:05 AM

    I’ve been in your shoes, and my opinion regarding your situation is to do what I — and others — did: sell.

    Why? Well, here: bought my house — which I LOVED — in 2007 at a high $210k. Ended up agreeing to sell four years later — 2011 — at a loss: $190k. I mean while the loss did suck, and I think about it to this day sometimes, the reasons why I was cool with it were 1) it was honestly overpriced anyway, in my opinion… the $190k was a correction that was bound to happen; and 2) I was giddy about not having to pay some big maintenance costs I knew would be coming up, plus just the general monthly costs of mortgage/prop tx/bills.

    Look toward the future, my friend, not at the past.

    As for me personally, I echo what some of the folks here have said: I will not ever pay a mortgage again… not only do I hate it when property tax seems to go up yearly, which, fine, apartment rents tend to go up, too, but apartment rents don’t also tend to include something major breaking EVERY MONTH in a house, so that’s like an extra $500-$2k per month you’ve gotta find in your budget somehow which really gets old.

    Right now I do live in a house that has my name on half the deed, but I make my husband pay the mortgage because he has four kids who live here half the time and trash the house like it’s some frat house so I refuse to contribute to that nonsense :) After we move from here (can’t wait!), who really knows, but it if were just me voting on that next step I have eight words for ya: TINY HOUSE EQUALS NO MORTGAGE AND MORE TRAVEL! xo J$

    1. J. Money September 28, 2015 at 12:25 PM

      YEAH tiny houses!!! Call up my wife and please tell her all about it so she’ll listen!!! :)

  40. Financial Samurai September 28, 2015 at 10:06 AM

    Hola J,

    I think the market has two years tops before it starts to decline again.

    Your hear is saying sell, so I’d sell and be happy!


  41. Kate Horrell September 28, 2015 at 10:10 AM

    I’m pretty sure that you’re going to sell, and I totally agree with that. My actual advice is to brainstorm ways to sell cheaply (maybe FSBO?) and to look into {that state} withholding on the proceeds of RE transactions by non-residents. I’d never heard of it until we looked into selling a house in {that state}. We decided not to sell so I didn’t get completely into the details, but it is something you will need to know about and want to understand completely. Even my RE agent couldn’t really explain it, though I suspect it isn’t as complicated as she was making it sound.

    You’re going to sleep so much better once you’ve made this decision!

  42. brian September 28, 2015 at 10:15 AM

    Damn man, tough decision.

    It certainly SUCKS, but just sell the darn thing. That $600/month loss you are calculating is probably on the direct cost, and doesn’t include you time, opportunity cost, and/or vacancy. Add those things in and its probably more costly than you realize to just hold on.

    If you end up tight on cash, you could always take a short term loan from the bank to cover the difference. Yes, borrowing money is usually a dumb idea, but you are already $290,000 in debt cause of the house, so if you can sell it an reduce that to like $10,000 or so plus stopping the bleeding you will probably be better off. You can pay off the loan super fast and be DONE with the whole damn mistake.

    Sorry buddy, losing money is never fun, but look at the loss as a tuition payment to the J$ school of smarter money decisions :)

    1. J. Money September 28, 2015 at 12:14 PM

      I actually do like that idea of getting a loan and using the $600 extra cash flow towards it! Hadn’t thought it through on that one yet, but I don’t mind taking on debt I know I can pay off at any point in time. Good one :)

  43. Brian @ Debt Discipline September 28, 2015 at 10:28 AM

    Sounds like selling would lift a huge burden off of you and the family from an emotional stand point. Yes you are taking an undetermined cash hit now, but in the long run being free of this house the freedom and piece of mind to move forward.

  44. Fervent Finance September 28, 2015 at 10:32 AM

    Sell it! Spend the money to get fresh paint on the walls and stage it. Hopefully this will ensure you’ll be over $300k and won’t have to pay too much out of pocket. No one likes an asset that costs them money!

  45. heavy hitter September 28, 2015 at 10:33 AM

    Sell. You can always buy another house to use as a rental on at least as good (or probably better) terms and that may also be easier to manage. Taking the financial hit isn’t fun, but the cost of holding on will probably be higher than the cost of getting out from under as you project forward in time.

  46. Jason Hull, CFP September 28, 2015 at 10:38 AM

    If you take roughly the midpoint of what you will have to be out of pocket from the two extremes, the breakeven point is 3.2 years. Two years or less is an easy decision when my clients had the same decisions. However, the one mathematical expectation that would make me stretch the time horizon is that interest rates will rise. They have nowhere to go but up, and now the Fed is making noises about raising the interest rates, and banks will follow.

    A mortgage is nothing but a bond. Bond valuations go inversely (as long as there’s no psychological maneuvering) with interest rates. Interest rates go up and the value of the bond goes down.

    Put another way, if interest rates go up, then the mortgage payment on the same amount of principal due will go up, meaning that people who have a fixed amount they can afford to pay in a mortgage will be able to afford less home.

    We rent and own investment properties (see here for why: because the house that you’d purchase as an investment is much different than the house that you’d own as a place to live. Most of the time, the house that you’d live in will be much more expensive in terms of cash on cash return (or, in this case, opportunity cost) than a rental property would be.

    There’s also a significant psychological cost to ownership of things, which includes houses. There’s a phenomenon called prospect theory which says that you value something more because it’s yours as opposed to not yours. When you have to worry about that thing which you own, it lights up pain centers in your brain because you don’t want it to be in anything but perfect condition because it’s YOUR thing. More stuff = more opportunities for your anterior cingulate cortex to fire off pain signals. You can read more about it here:

    The other way to look at your decision is whether or not you’d pay $X (your offload cost) to buy a -$600 cash flow that has an uncertain future appreciation. If the answer is no, then sell.

    I suspect you’ll enjoy renting. There’s no better feeling than sending an e-mail to the leasing office/property manager and having the magic garbage disposal fairy come and fix your garbage disposal, freeing up your time that you had previously been spending on home maintenance to do more important things, like spend it with your family.

    You’re at a point where the value of your time > the value of your money. Maximize your time.

    1. J. Money September 28, 2015 at 12:30 PM

      yes, I’m loving renting as we’ve been back at it for 2+ years now :) Which is why I’ve been okay with the $600/mo loss since I’d much rather be here renting than there living inside of that house (as crazy as that sounds).

      Loving those articles though and will go check them out as soon as I’m done commenting here. I tend to get stuck on “prospect theory” a LOT, and only recently been better about it since I’ve been selling stuff on Craigslist almost every single week. I’m slowly learning that it doesn’t matter how much YOU think it’s worth, but what the person holding the cash does :) And if we sell this thing I’m praying that cash person sees it in the $320k range!

      thx for the well thought out comment – really appreciate that.

  47. Jessica ward September 28, 2015 at 10:47 AM

    I’m a Realtor in the Seattle metro area, and as a rule of thumb, it costs about 9% to sell here (commissions and excise taxes–I think we have particularly high taxes here due to not having an income tax). Also wondering on the source of your values…around here Zillow can be off dramatically (my own home was overvalued by Zillow by 2.5 times appraisal), and tax assessed value isn’t quite “market” either–in the outlying areas of seattle, most homes sell for about 125-135% of assessed value. The last point I’d like to make is that economists are predicting another slump in the real estate market this winter, so if you want top $ out of your home, this would be a good time to sell for maximum value, and to eliminate the potential of damages that might be done by the next tenant. Good luck in whatever you decide to do. I understand that home ownership isn’t for everyone. I personally love the hassle-free lifestyle of owning a condo. (All the tax advantages, with no roof cleaning and gutter maintenance!)

    1. J. Money September 28, 2015 at 12:32 PM

      Hey Jessica! It’s been a while! :)

      I agree with zillow and tax assessment being way off. The #’s shown here are a net cast around what my realtor thinks the place is worth based on his expertise in the area. He didn’t give me that broad of a range I listed here, but I extended it just to be conservative with reality :) That way there’s hopefully no surprises!

  48. Zee September 28, 2015 at 11:07 AM

    So $600 a month for 1 year is $7200 that you lose each year for renting. Do you think your house will appreciate that much in a year. Perhaps, but I doubt much more at this point. You also have to get new people in there and like you said that costs money too.

    I don’t think the tax write offs are going to be enough of a benefit to outweigh a major leak in your finances. Get rid of the headache and save yourself the stress.

    Let me now appeal to your minimalist tendencies. Simplify your life.

    1. J. Money September 28, 2015 at 12:15 PM


  49. Our Next Life September 28, 2015 at 11:39 AM

    The “on paper” decision seems fairly complicated, and would require running a lot of numbers. But I agree with a bunch of the commenters in saying: Go with your gut. You want to sell, so sell. It’s clearly stressing you out to have that mortgage and to own that home, and while it’s not so easy to quantify the value of unloading stress, we believe it’s worth a ton. You’ll bounce back from the cash hit, but you’ll feel lighter once you get that thing off your shoulders.

  50. D September 28, 2015 at 11:49 AM

    Sell! Here’s why regarding your Cons to selling:

    1. Big chunk of cash out the door: This is the biggest problem IMO IF this is your emergency fund. If you don’t touch your emergency fund, or if you can keep the bare minimum, I’d sell.

    2. We’d be selling it at a loss:
    Irrelevant. Whatever $$$ you’ve put in is a sunk cost. What matters is what it’s worth today, what you owe, and what it’s cash flowing/returning.

    3. We lose any chance of turning it into an extra income stream over the years:
    If you want rental income and a mortgage, you can easily find a cheaper, cash-flow positive rental if geography is not a concern.

    4. It’ll take some bandwidth to get it prepared and cleaned up and ready to be shown properly:
    Tied in to point #1.

    5. It might not be the best time to sell as the market hasn’t fully recovered/improved?:
    You’re market timing here. Very smart people think we may be hitting another peak while other very smart people believe we’ll keep going up.

    6. And, in a weird way, we’d lose our back up home if the $hit ever hit the fan”.:
    See point #3.

    I love your pros to selling. Your mind appears made up to me. Thanks for sharing and thanks for the site.

    1. J. Money September 28, 2015 at 12:34 PM

      thanks for chiming in! glad you’re enjoying it so far – even with my crazy post today :) I try to be as real as I can with my money (for the better or the worst) so you caught it on a worst day, haha… But I totally hear what you’re saying here and appreciate you taking the time to say so.

  51. Joanie September 28, 2015 at 11:51 AM

    I just sold my house and moved into an apartment. Best thing I ever did! I say cut your losses now and enjoy the peace of mind.

  52. Paul September 28, 2015 at 11:59 AM

    Feels like you’re not yet at the either / or point. The spectrum of sale scenarios you lay out is quite broad. Can’t you start down the path of selling to get much better market / exit information? You can always stop just short of signing on the dotted line, but it would be good to see what the market thinks it’s worth. One interesting scenario is that another investor may have a very different profile from you – some equity to bring down the mortgage rate, perhaps multiple units + hands-on approach to help with property management costs, and a bullish view on future lease rates. Not sure if the more likely sale is to an owner occupant or investor – let us know (and how much time is left on the existing lease? that could be important).

    1. J. Money September 28, 2015 at 12:37 PM

      After reading all this, as well as some emails that have been shot to me so far today, I’m thinking the best route would be to actually list it and go through the process as you mention, and then if we get fortunate and the $$ is closer to the positive line, we sell, and if not (and especially if it’s completely off into the -$40k range) we go back to renting it out again. Kinda best of both worlds and we have some time to pull the trigger one way or the other. I don’t know the exact date our tenants are leaving yet, but I know it’ll be sometime sooner than later. Will keep y’all updated!

  53. Been There Done That September 28, 2015 at 11:59 AM

    I was in a very similar situation until last year, when my tenant died, leaving a quasi-horde mess. I had been renting the house out for 3 years and taking a $550/month loss, hoping that the market would recover eventually and/or I could get to a cash-positive situation. But, things kept breaking down, there were issues with the next door neighbor (who threatened to kill my tenant for talking to his wife!), water issues in the basement, etc. etc.

    So, I sucked it up, fixed up the house ($25K in repairs, including new roof/gutters), put it on the market and sold it after 3 months. I lost a ton of money on the house (tax loss of $70K, cash loss of $120K overall), but just not having that albatross around my neck anymore is SO LIBERATING. No more stressing about phone calls from my tenant and worrying about the physical state of this very expensive asset I (stupidly) purchased at the peak of the market. So I’m out $120K…that sucks, but live and learn. Trust me, you won’t regret it.

    1. J. Money September 28, 2015 at 12:39 PM

      Oh wowww!!!! That is incredibly worse than our situation, thanks so much for telling me so! Even though damn, I wouldn’t wish that on anything :( Tell me that’s not the reason your tenant died btw??? the wife? :)

      1. Been There Done That September 29, 2015 at 11:08 AM

        Tenant died of a heart attack (at age 44!), thankfully NOT in the house.

  54. Michelle September 28, 2015 at 12:29 PM

    This is a very tough decision. We were in a similar situation recently and decided just to sell our home. We had to pay money to get out of it due to selling at a loss and realtor fees, but I am SO happy that it is out of our lives :)

  55. Gen Y Finance Guy September 28, 2015 at 12:49 PM

    Obviously, at the end of the day, no matter what any of us chime in with, it is you that has to make the final decision. As you know well, we don’t always make decision based on pure numbers, meaning we are not always rational. At the end of the day you have to make the decision that is going to help you sleep better at night.

    Things that started to go through my head as you described the $600/month loss in negative cash flow every month is whether or not you are fully maximizing the tax benefits of this rental property.

    Meaning from first glance you are losing about $3,600 a year. My guess is that this is before depreciation, which you do qualify for since it is a rental. You can’t write off the value of the land, but you can write off the value of everything else over 27.5 years.

    So, let’s say that of the $360K purchase price that $260K represented the value of the physical structure (i.e the house itself). With a 27.5 year depreciation schedule, you would be able to show an additional (non-cash) loss of $9,454/year.

    Now your total loss for tax purposes is $13,054. Let’s assume you are in the 28% tax bracket, which would imply a tax savings of $3,655 a year. Which now means you potentially have a break even property on your hands. You have some one else amortizing the loan for you, which is positively impacting your net worth.

    Now there are some rules around how much of a loss from rental real estate you can pass through your return. But if your AGI is $100K or less than you can pass through $25K/year in losses from rental income. You get a partial deduction up to a $150K AGI, and get’s completely phased out above $150K (you don’t lose it really, it just becomes a carry forward loss that you can use when you eventually sell the property).

    That is unless you can qualify as a real estate professional, which allows for unlimited pass through of losses from rental properties.

    I am not a tax professional, but have had to have the same kinds of decisions to be made. At the end of the day it made more sense financially to keep the break even property (from a cash flow perspective, it’s negative $50/month) and maximize the tax benefits. Although our AGI is now higher than the $150K limit, my wife qualifies as a real estate professional, so we get to pass through the paper loss and save more on taxes

    So, although the rent we collect is $50/month short of what it costs us, after taxes, we get more benefit than the negative cash flow. And our net worth is improving by the amount our tenant is amortizing our loan every month. Which in our case is about $550/month.

    In your case, after taxes it is likely a push for you (me speculating), which is still ok in my book, and better than writing a check for up to $40K. And you will be getting a positive lift in net worth every month from someone else amortizing the loan.

    Only suggestion might be to stop making the extra principal payments if you decide to keep the place, as that is not serving any benefit for you at the moment.

    Hope that helps.



    1. Lucas September 28, 2015 at 1:31 PM

      Agree that JMoney might be fine with the depreciation as in the near term it is unlikely that prices would catch up to the depreciation. However if your depreciated basis is going below the likely sale value of the home (unless you plan to do a 1031 exchange to another rental property), then you will owe 25% depreciation recovery.

      I am looking at the #s of keeping (renting) or selling my home if we move out of the area. Since with kids I am in the 15% tax bracket, saving 15% now to pay 25% latter is a negative for me.

      Anyway hard to tell exact #s without all the details.

    2. J. Money September 29, 2015 at 4:54 PM

      This is great!! and something I admittedly left out while putting these first round of ?’s and pros/cons together. so really (really) appreciate it.

      it’s true that a good chunk of these mortgage payments are going to pay off the mortgage itself, plus I’m adding in extra every month (which you’re right – I could stop – it’s just such an engrained habit! :)). I have a call set up w/ my accountant to go over more of this stuff. I’m not sure if my AGI will be under $100k this year, but I know they’d have the answer for me as I keep them updated on ALL my $$$ every quarter just to make sure things are on track (for quarterly payments).

      so glad I posted this out there – y’all are making me think and i’m loving it!

  56. Logan Maloy September 28, 2015 at 1:06 PM

    “If I were in this situation…” doesn’t really count because I can tell that we are wired quite differently on the homeownership platform. But it is obvious that you want to get rid of it.

    My bet is, if you keep it you’ll be wanting to sell it a year from now and you’ll have a full year worth of stress piled on top of that. If you sell it, a year from now you’ll probably never think to go back and do all of the analysis to find out what would have happened if you still owned it. It’ll be a done deal so you can move on with your life. Like Pumba says in the Lion King “You have to put your behind in the past.” Accounting 101: Losts costs are irrevelant.

    If you do keep it, it “could” turn into an income producing rental property but you don’t seem to enjoy the investment so why would you fight with it that long when you could get out and start investing in something that turns you on even more. If you don’t like being a landlord don’t, invest in something you enjoy and the returns (or losses) will taste better.

    Even if you use up most of your cash while unloading it, if we know anything about you, you won’t have a hard time finding ways to build your cash back up to a comfortable level. Just do it and picture yourself a year from now and how great it’ll feel to not have this wieght in the back of your mind pulling you down.

    1. J. Money September 29, 2015 at 4:55 PM

      Very true…. I’d be much happier with this $600 going straight into VTSAX every month! That’s my investing drug of choice.

  57. Lance@HealthyWealthyIncome September 28, 2015 at 1:18 PM

    Is it a home or an investment? If you only look at your home as a headache instead of a place for your family to have some peace and comfort then you don’t have a home, you have an investment and it sounds like it isn’t a good investment. Like with most investments many folks hold on to it too long and hope things turnaround only to wish they had sold earlier. I’m not in love with my house, but my wife and daughter have awesome friends in the neighborhood. Our home is more than 2×4’s and granite, it has community and a nice easy payment. As long as my girls are happy and my home doesn’t rule my life then I’m good to go. I’ve learned that you can always start over whether it is home or career.

  58. Richard Anthony September 28, 2015 at 1:19 PM

    Wow! I didn’t realize that we’re in the same boat, J$! (Pun intended, seeing your lovely “house on the lake”–literally.) We could–and should–discuss this at length. I’m sure that we’ll have plenty more factors to consider after your readers weigh in with their excellent comments.

    My 2 cents:

    First, do not–repeat, DO NOT!!–let yourself get into desperation mode. This will negatively impact your bargaining position whether you decide to keep it as a rental property or sell. If you can carry it a while longer while seeking a suitable tenant, I would advise you to do that. Once it’s rented, if you want to pursue selling it, I’m sure that your unique property is some lake lover’s lifelong dream, rather than being your nightmare. Your job is to find that ideal buyer! Or have them find you.

    In my case, I’ve been unable to rent my 2-story colonial home a short commute from NYC for over a year. The reason is simple and something well within my control. I’m a strictly “NO PETS” landlord, and so far (though it continues to break my heart (and wallet)) I’ve declined at least 6 offers since the first month of vacancy to now.

    Here’s a profile of the house. If you know of anyone transferring to the NYC area who’s in search of housing, please pass it along: .

    Oh, one final suggestion about your situation. Publish more particulars on your house (all the favorable ones that led you to buy). Maybe do a craigslist ad for yourself. Or have your property manager do it. As your advertising consultant, I would counsel you to stop calling it a “mistake” immediately.

    Remember, NO desperation. Deep breaths . . . steady hands , , , iron will:)

    1. J. Money September 29, 2015 at 5:01 PM

      Haha yes – I will most DEF keep all the stresses/hate speech away from all marketing material whatsoever ;) I plan on having my realtor do it all (with my input), so I’ll be on the sideline just holding my breath and waiting for someone to fork over a half a Mil if we push forward with listing it – hah.

      And I WISH that was my house in the picture above! I took it from a royalty free site and someone on facebook actually told me they recognize it! haha… apparently it’s a famous house in Perth Australia called The Crawley Boathouse. And I’d be super rich if it were actually mine :)

      Off to go check out your posting… sorry to hear you’re having a hard time too.

  59. Lisa O September 28, 2015 at 1:59 PM

    Sell…I believe it would lift a burden off of you. You stated it was a mistake, it looses money every month, it is in a different state, the lease is going to end, it time to let go of the mistake and free yourself from it! I work for a person that has rental properties and I do not see how anyone makes money off them…you pay the mortgage, taxes, maintenance, insurance, legal fees and management. Some people out there really don’t take of the properties and then you have more maintenance before you rent again. I tell my boss…he taught me a lesson that if I don’t live in it….I won’t own it :)

  60. Braden dunlop September 28, 2015 at 2:04 PM

    You are always so high on “side hustles.”……..why are you allowing this property manager to hustle you? You can vet your own renter. Hell, I did it from out of State for one of our rental properties for two years. Demand a larger see deposit and hope for the best. Turn your mistake into a huge advantage by being more involved.

    1. J. Money September 29, 2015 at 5:10 PM

      No way on this one – I don’t have the patience or legal know how to make sure I did this right. Nor do I care to really. I know what I like and what I’m good at, and that is not one of them :)

  61. Merrin September 28, 2015 at 3:06 PM

    The first word on your pro list says it all “freedom” Take the loss and the lesson. I love owning our home – but it’s obviously not for you. Money isn’t everything.

  62. Crystal September 28, 2015 at 3:07 PM

    You already seemed to answer your own question. :-) It sounds like you hate it and want it to die, so you probably shouldn’t own it anymore. ;-)

  63. Master Nerd September 28, 2015 at 3:13 PM

    Sell. Ditch the realtor and sell privately to save on the commissions, which ARE HUGE! Or at least find a cheaper one. I’ve seen plenty of commission-free or 1% commission realtors around my area. Surely you have similar options where you are? Nobody really has their “own” realtor, it’s just someone you’ve worked with before. So don’t get emotional over keeping “my realtor” if you can find a cheaper one or forgo one altogether.

    1. J. Money September 29, 2015 at 5:13 PM

      we probably could, yes. I’m going to talk to our old one and see what else is out there, but as a former realtor I actually believe in how great they are and have no problem paying $$ if the value is there. And my guy will drop the normal rate for me if we work together again since we have in that past which is nice. Haven’t made up my mind yet, but I’m noting your suggestions! :)

  64. Jason September 28, 2015 at 3:23 PM

    I’m in this situation right now, and while I won’t be having a huge loss I will be out the costs of fixing up the house to sell it ($7k) and the costs of what I put in for appliances and fixes over 3 years. If I subtract the closing cost help the seller needs, and the other closing costs and agent costs, I’m getting back close to my original downpayment. Which will be amazing because I’ve had all of this money tied up in a bad decision.

    For me it was bad because home ownership was never a goal or need for me. I was with someone who didn’t feel my condo rental was enough space for her, and even when there was issues with this house as I was buying I let her talk me into ignoring them. So then I inherited a house with issues. Add that to a whole bunch of personal issues and I am glad to be done with the house soon and rent for the foreseeable future. I’ve always been saving and investing, and this will just be a bad investment to put on the books and move past.

    1. J. Money October 4, 2015 at 4:14 PM

      Good, man! Rock it and we’ll do this thing together!

  65. Chris @ Flipping a Dollar September 28, 2015 at 3:57 PM

    Sorry dude but it’s the sunk cost falacy at it’s best. If you wouldn’t buy the house today with your current parameters (money down etc), then you should sell it! It’s a lot easier said than done though.

  66. Nita September 28, 2015 at 4:05 PM

    We dumped ours and are sooooo much happier and now starting to recover from the horrid ordeal. In your case – you could (1) Rent it longer til the Owed $ = Sell For amount. (2) Or you can take the hit, and take 2 years to recover.

  67. jestjack September 28, 2015 at 4:41 PM

    Hmmmm…..Been a real estate investor 37 years this past September and have seen a lot in the market. First the thing that no one has touched on….your tenant could not have picked a worse time to vacate for you. Nobody wants to take the kids out of school to relocate as school just started. In addition, as you prep the place you’ll have to heat it. Aaaand activity will “fall off the table” after Halloween….Then there’s Thanksgiving and Xmas….not good….Best time to list/sell….April and May…plenty of time to get settled and get the kids ready for school.
    A looong time ago a smart ol’ investor told me “Ya make money on these houses…when ya buy ’em…” So the translation is you have to shop for a “deal” and you didn’t. I would take a ride up to the property and take a look around ASAP. Go on a Sunday when everyone is home and see how the neighborhood is doing. Are the homes taken care of….no new negative developments?
    If you take a look and like what you see….keep it. Rentals are getting tighter so I would raise the rent and for the record I know folks in the military and they know pretty far in advance when they are getting moved. So for this to be sprung on you…not cool. And I’d make VERY sure they really were “re-deployed”. I would NOT sell….I would take the write-offs and look upon this as a “forced savings”. And you never know, your wife may get a job back where this house is. I read this blog about folks not wanting to own and give you the perception that “easy…cheap…. rentals are everywhere. This couldn’t be further from the truth unless you want to live in an apartment complex and have your car broken into once a week. I get calls daily…folks looking for a place to rent…In my mind,taking a $40K loss on this property is like buying two brand new Toyota Camry’s … bring them home and set them on fire in your driveway…Real Estate investing is a “marathon…not a sprint”….You need a CMA from your Realtor to make an intelligent decision….

    1. J. Money October 4, 2015 at 4:19 PM

      Fortunately our type of place prob won’t cater to kids much (one of the reasons we left it), but def. sucks on the timing for sure. My realtor says we’re good until Thanksgiving in our area which means we have to hustle fast if we’re going to pull the trigger… got meetings and all set up so fingers crossed!

  68. Sukina September 28, 2015 at 4:43 PM

    Man sell that poor investment and move on! I know for a fact that you will probably hurt for a minute with the money you have to give the bank but money can be replenished. I know that for a fact! Like Mr. Mustache says 7200.00 a year for 10 years is $72,000! Imagine saving it the same way with a conservative interest rate in dividends or CDs or WHATEVER! 20 years is 144k. You have kids to worry about not a property that you can’t stand. Therefore, Keep Calm, Sell the House, and Carry On!

  69. Steve Miller September 28, 2015 at 5:03 PM

    I would sell it, it’s worth it just for the peace of mind it will give you.

  70. Avia September 28, 2015 at 5:31 PM

    All things considered, I’d say get rid of the burden. I personally could not stand losing money every month and the liabilities that go with owning rental property. If, at the end of the next 30 years, you could end up well into the plus column in spite of the losses you know about and the potential ones you don’t, you’d have more to think about.

  71. Marc September 28, 2015 at 6:37 PM

    My (now) wife and I were looking to move in together a little over a year ago. We were torn between renting an apartment or buying our first house. The apartment route would have cost us more per month and we didn’t like the idea of not being settled down in that we’d probably have to move again in a couple of years. We wanted something more permanent and we wanted to be more “grown up” in that we owned our first house!

    We went the first house route and there really is a great sense of accomplishment that comes with it.

    The reason why renting costs a little more is because the owner takes most of the risk. If anything breaks, it’s up to them to fix it. If you’re the homeowner, it’s coming out of your pocket. That’s why there’s a price premium. I wish I would have considered this when we were making our decision because while it’s been nice to spruce up the place and make it our own, our roof is leaking as well as our bathroom sink.

    I’m also trying to move into a location-independent career and the idea of moving to Europe isn’t as far-fetched as it once was.

    I’m not sure if we’d keep the house and rent it out if this happens and (hopefully) make a profit from renting it out or if we’d just sell it and move on.

    There’s times when I feel like our house is kinda keeping us here and that’s no bueno.

    Good luck with your decision!

    1. J. Money October 4, 2015 at 4:21 PM

      Thanks man! And good luck w/ the Euro dream – I hope you achieve it!!

  72. Jason September 28, 2015 at 8:01 PM

    I will chime in with others and recommend that you sell with a caveat. I might recommend you wait and put it on the market in the spring. While that means you will continue to see it as a loss your investment will go up, probably, a little bit. You will decrease your loan value and you can plan/save some money to eat any costs. That gives you a good six to 8 months to prepare a bit more. But I do agree you should sell it will make your life cleaner.

    1. J. Money October 4, 2015 at 4:22 PM

      That’s def. a valid option too :) Or we can put it on the market for the month and see how it goes, and if no bites rent it out and try again later maybe? though it would be annoying to go through it all…

  73. Ryan Mulligan September 28, 2015 at 11:03 PM

    You should look into Flat Fee MLS listings with a local real estate broker who can rent you an realtor lock. You can probably save at least $8k (3% selling realtor fee is $9k). You can get the local broker to put the lock on with the help of your tenant and use a local attorney to do a power of attorney and have him or her transact the sale so you don’t have to go back there. I’ve done this once before with success. I’ve also done one in state this way using websites like

    1. J. Money October 4, 2015 at 4:23 PM

      Can I just hire you to do it for me? :)

  74. StackingCash September 29, 2015 at 2:09 AM

    I wish you would have listened to me in the beginning and let the bank foreclose on that anchor to your life. But you did what you thought was right and enslaved yourself to the bank for so many years. I have friends that lost their homes to foreclosure and/or short sales, declared bankruptcy, and after only two years bought bigger and better homes for cheaper! Anyhow, “spilled milk” and sell the damn thing!

    1. Lisa O September 29, 2015 at 11:19 AM

      I don’t think I would want to read a blog of someone that walked out on an obligation he/she chose. I am glad to see that J$ takes the responsible road with his obligations I believe that is why his blog works!

    2. J. Money October 4, 2015 at 4:25 PM

      No way in hell would I walk away from the place – why would I screw someone/company over like that just because I changed my mind? It’s my responsibility whether I like it or not. And it’s not like I can’t afford it, whether I want to or not. Not a fan of people walking away unless it’s a super dire condition.

  75. Mrs. SimplyFinanciallyFree September 29, 2015 at 9:06 AM

    It looks like the numbers (and your gut) are telling you to sell. Any chance you could try a For Sale By Owner route first just to see if you might have some interest and don’t have to lose any money to realtor fees? I would at least try selling for a couple of months and worse case scenario if there are no good bites you could go back to renting. Best of luck!

  76. Even Steven September 29, 2015 at 2:08 PM

    I would sell and I’m a real estate guy. Mostly because you are not happy and consider it a mistake. It sounds like even your best case scenario you are not very happy with.

    Go all-in and sell it. I made a mistake buying a Mercedes when I had debt and as soon as I woke up and realized it, that bad boy was for sale, asap.

    1. J. Money October 4, 2015 at 4:26 PM

      Smart man! And look at you now completely out of debt :)

  77. Winn September 29, 2015 at 2:27 PM

    For years you have been dragging around that house like a load of bricks and wearing the scarlet letter for your mistake. Every time you interact with that house you are beating yourself up over that mistake. Enough. You know you want to dump it and be done with it for good for all the reasons you stated. Let it go and put it behind you. The freedom will feel soooooooo good!

  78. Crystal September 30, 2015 at 1:55 AM

    i think it’s great you’re considering your options but if I were you, I’D DUMP THAT HOUSE! You”re house is my $53k grad student loan. A huge financial regret. I can’t tell you how free and relieved I felt when I made that last payment. I bet you and your wife would feel a thousand pounds lighter by getting rid of that noose around your necks. Good luck with whatever you decide.

    1. J. Money October 4, 2015 at 4:27 PM

      At least you got a degree out of it! :)

  79. Justin Murphy September 30, 2015 at 8:17 PM

    In a word, sell. By your own description, you hate ownership. End of discussion.

    As to the financials, only if you enjoyed owning and managing rental properties, would holding be worth considering. But then it’s not a home but an investment, just like any other. As it is losing money each month, it’s not much of an investment. Unless you have some insight into its near term value recovery (aka market timing, so doubtful), there is no guarantee it will ever get back to par.

    BTW, I appreciate your sympathy and support for military service members, but double check your state’s fair housing laws with your property manager. The more stringent laws may only apply to multi-family (ie 4 plus units) not single family homes.

    Good luck!

  80. Paul September 30, 2015 at 9:41 PM

    Dump it. Sell, sell, sell. Sounds like such a huge headache, money suck, and renting it out is only worse bc ur losing money. Sell it.

  81. Todd October 1, 2015 at 1:54 PM

    Unfortunately I have been in nearly the exact same position. So I can speak from experience. Each one of your cons could in a vacuum have merit but the situation you are in as a whole would most likely be bettered by selling.

    1. Big chunk of cash out the door. This is going to happen whenever you sell. It’s just a matter of timing when it happens. It always costs money to sell a house. I will say I thought this way and ended up getting a second renter. That second renter made sure that my costs skyrocketed from where they would have been if I had just sold at a loss. It became a much larger loss. Your house will experience wear and tear as it ages and one water leak on the second floor can have you dreaming of only a $40,000 loss.
    2. We’d be selling it at a loss. It’s going to be a loss. It’s never easy to make a move that will lock that loss in. It’s already happened. Who know where the market will be in a year. Generally housing tracks inflation so you shouldn’t expect to much movement. Yes there was a bubble in housing and in many areas there was an over correction. How can anyone know if it’s back in fair value territory or has a couple more percentage points to go. Also, keeping it makes you pay opportunity costs.
    3. We lose any chance of turning it into an extra income stream over the years. This isn’t a good rental. If you desire extra income from rental properties there are much better opportunities out there. This one has far to many negatives to consider. You are a positive person and want to turn a negative around. The best and fastest way to do that is move on and regroup.
    4. It’ll take some bandwidth to get it prepared and cleaned up and ready to be shown properly. This is already an issue. No matter when you sell it this has to be done. Either it’s a delay or you can rip the bandaid off it has to be done.
    5. It might not be the best time to sell as the market hasn’t fully recovered/improved? See previous comment about the market.

    It’s now two years since I unloaded mine. I can tell you that during the time there were huge hassles. Back and forth with the buyer, inspector and bank. Lots of checks written and time spent. But it was worth it. It’s gone and the day it closed was a very sweet day indeed. Every month that the extra money stays with me. No crazy phone calls or emails from tenants.
    And, in a weird way, we’d lose our back up home if the $hit ever hit the fan. If it hits the fan the reason most likely would be from this house. Also, what kind of strains has this situation put your relationship through. Getting rid of mine was a huge hassle and I lost money. It was already a sunk cost though and I bit the bullet and moved on. Now there is nothing but peace. You could consider putting it up for sale at a price that’s acceptable to you and see what happens. You can always decide it’s not worth it financially and take it off the market. Good luck and thanks for all the great content!

    1. J. Money October 4, 2015 at 4:35 PM

      Love this!!! Congrats on getting out from under yours too, boy… Lots of great points here – esp with the house getting older and wear and tear/etc. Really appreciate the time you spent typing all this stuff out – and for reading my blog to begin with! :)

  82. Meg October 1, 2015 at 1:59 PM

    Here is a calculator I stumbled upon the other day that might help you (check the advanced options to put in what you’re paying a property manager, etc.).

    Honestly my hunch is that you’re better off holding it for awhile longer. A loss of $600 a month hurts, but a) you’re also building equity each month, b) you’re getting some tax benefit, even if it’s deferred until sale before you can recognize the compounding losses.

    More importantly though, if it costs you $20K to dump the place that is nearly 3 years of losses at your current rate ($20K/$600 = 33.33). So you can calculate a breakeven analysis based on how much it will take to dump the property once you know more about that precise figure. Using the $20K loss example (remember to include costs to fix it up plus realtor commissions), then if you think the value will increase by more than $20K in three years, it makes sense to hold on (rents could go up in that time frame too by the way). If you think it’s doubtful the value will have recovered to that level in three years, then go ahead and dump it now.

    1. Meg October 1, 2015 at 2:00 PM

      And FYI I’m switching to use my real name Elizabeth for future comments!

      1. J. Money October 4, 2015 at 4:37 PM

        Thanks Elizabeth! Will check it out :)

  83. Dividend Mantra October 1, 2015 at 4:24 PM


    You’re already extremely wealthy, my friend. The money will naturally work itself out, whether you want it too or not. Your snowball of growing wealth and income can’t be stopped.

    Thus, I’d sell the house and move on. I’m biased because I think homeownership is really overrated and very much a bad idea for some people, but it sounds like you’re not particularly enamored with ownership, either. So get rid of it, lose a big headache/albatross, and move on to bigger and better things. :)


  84. JJ October 3, 2015 at 9:08 AM

    Move back into the house, keep the property manager or do all the work yourself. Make extra payments on mortgage and take out home equity credit line. Pay it off early, then rent it out. May take few years but that can turn it into a income producer and make u more money over the years than not having the rental. It being in a different state and your expressed hatred of ownership, sell it and free your mind from the hassle if you can’t make it an income property

  85. Kara October 4, 2015 at 10:26 AM

    Perhaps if you add up all of the hours you spend just THINKING about that house, feeling bad about it and having it affect other areas of your life, the financial hit might be worth paying for the peace of mind.

    A loss is only a loss if you think of it that way.

    So, change your mindset and do what will make you happiest.

    1. J. Money October 4, 2015 at 4:39 PM

      Good point :)

  86. John Edwards October 4, 2015 at 2:02 PM

    I bought my home a few years before the bubble. When I created my child, we needed to either pay it off quickly for get out because my wife had to leave her work. Our income was about to be halved, and we owed $330,000 wish on the mortgage.

    I bit the bullet and paid my home off and restarted saving for retirement. I live mortgage free.

    Personally, I love ownership. I no longer have to pay “the man” the $10,500 a year I was paying. I have a yard and I get to see the value of my place going up over time. Everything I spend for housing is now an investment in the future value of my home. And since I live in Seattle, the values are now skyrocketing.

    Of course this is only was possible thanks to having enough to get out of my mortgage. By getting out, I saved about $300,000 in interest. A 30 year loan for 350K at 5.5% would have cost me $320K over the life of the mortgage. By getting it paid of early, I cut the interest payment down to $32K.

    In your case, I’d say get out if you can’t pay it off immediately. The hit you will take is its pity compared to the cost of interest over the life of the mortgage.

    BTW, I have an awesome spreadsheet for calculating mortgage payments if you’d like. It shows how much the interest cost you over time. Email me if you’d like it.

    1. J. Money October 4, 2015 at 4:41 PM

      Hah! Spreadsheets are awesome, I love ’em. Unfortunately we can’t pay the house off even if we wanted to unless we cashed out our retirement accounts (which would never happen) but I can def. see the appeal in that. No mortgage/rent for the rest of your life would be pretty incredible!

  87. John Edwards October 4, 2015 at 2:04 PM

    ..and of course, spellcheck does nice things…

  88. Chris Peach October 11, 2015 at 11:43 PM

    In 2010 we had a similar situation – we were upside down and taking about a $500/month loss. The stress, headache, and “what if we lose the renter” was also weighing on us more than we even knew. We decided to stop the bleeding and take a beating with the loss. It literally felt like a kick in the face with a golf shoe. Five years later and it doesn’t matter any more. We are much better off w/out it. My point is this – your J. Money. People like J. Money can get over a $30k loss because you’re making kick a$$ (J. Money fashion) choices with the rest of your money and the loss is only a small hiccup in your life. I’ll be following along to see what you end up doing. Good luck!

    1. J. Money October 12, 2015 at 1:10 PM

      Thanks for the encouragement my man – I want to say the same thing you just did 5 years from now!

  89. Alex October 13, 2015 at 9:58 AM

    I’d keep the house. Sure, you lose $600/month but you’re presumably also paying down a mortgage each month (which based on when you bought and for how much and interest rates at the time I bet you’re paying down $600-700 of principal each month).

    Further, your house is appreciating. It might not be going up at 20% per year, but even at 2-3% you’re looking at an increase of $6-9k each year which you will eventually get back when you sell.

    Rent should only go up over time while your mortgage stays the same and your taxes may only go up slightly each year. A $600/month loss now might be a $300/month loss in a couple of years and a breakeven in 5 years.

    Then finally, its what can you do with the $40k you have now? Even at a modest 5% return thats $2k/year of $167 a month.

    All of this and I think you’re not really losing as much money as you think.

    Unless you’re totally strapped for cash each month and the $600 is just tearing your saving apart then you’re better off holding the house.

    I had a similar issue with a NYC co-op I bought in 2005 and moved out of in 2010. Granted NYC is its own animal. However, the first year I lost $200/month and now I make $200/month, plus all the perks I mentioned above.

    Good luck.

    1. J. Money October 19, 2015 at 12:55 PM

      I think you’re right in that the longer we keep the more it’ll even out and then *make* money it’s just a question if I can stand it emotionally. Which is getting harder by the month ;)

  90. Marisa Stone O'Brien October 16, 2015 at 7:20 PM

    How close do you live to the property? Can you property manage yourself? Although it is a pain in the ‘YKW’ don’t the charge you 25% of the monthly rental income, wouldn’t that get you closer to break even? Could you at the same time raise the rent?

    1. J. Money December 21, 2015 at 12:46 PM

      we live pretty far away and suck at home maintenance anyways :( we did raise the rate during the last renewal, but nothing too substantial.

  91. Tre October 18, 2015 at 8:52 AM

    How much are you losing paying $600 towards that house every month instead of investing $600? We are in a similar situation and decided to hold onto the property until we could sell without taking a loss. Hopefully next year will be the year we sell!

    1. J. Money December 21, 2015 at 12:47 PM

      We’re losing almost all of the $600! haha.. Some goes towards principal payment of course, but yes – would MUCH rather throw it all towards investments each month – which is the plan down the road :)

  92. A Reader December 19, 2015 at 10:30 AM

    What did you eventually do? I’m reading through selections from the archive of this blog, so perhaps you reveal what happened later. Your debate reminds me of similar decisions I’ve had to make or am making now, related to possessions small and large, and the pros and cons of holding on to or selling them.

    1. J. Money December 21, 2015 at 12:48 PM

      We decided to put it on the market :) So we’ll know once and for all what we’re dealing with now – fingers crossed!

  93. Melessa January 16, 2016 at 9:38 AM

    I just found this article and find it so interesting. We are in the same situation and are trying to decide which path to take. Did you sell your home? What price did you end up getting? 280 or 320? Or maybe you decited to rent again based on the sales market in your area. Great comments from every one.

    1. J. Money January 20, 2016 at 11:27 AM

      I’ll have a major update on this very soon :)