“Dipped into the condo equity to the tune of $60K over the past four years; Won’t sell and rent because renting is just “throwing money away.” ”

TPFKAA at VREAA 23 Jun 2011 9:03am “Got talking to a family I know. Two kids under five; a boy and a girl. The wife confided that they had dipped into the equity to the tune of 60,000 over the past four years just to make ends meet. 2 bedroom condo in 25 yo building, purchased in 2004 for 200k, now “worth” 350k, family income 3k/month net, mortgage payments 1500/month, strata fees 300, and special assessments rain down like riot debris. $900 last month, $2,000 a couple of months ago… She estimates a couple of k per year. A 2 br in same building costs $1200/month to rent. I asked why they don’t sell and rent for a while. She told me it is because the husband believes renting is just “throwing money away.” He wanted to sell and buy a house in Abbotsford about a year ago, but she did not want to leave the area they have lived in for 7 years. What is going to happen to this family if/when the equity disappears and no more RE_ATM? Even worse, their HELOCs may place them underwater.. and with a boy and a girl in a 2 br, that is no fun. What if rates rise? and the kicker… the sole income earner, the husband, works in construction. I don’t think they realise the dangers they are in thanks to being home”owners”.

3 responses to ““Dipped into the condo equity to the tune of $60K over the past four years; Won’t sell and rent because renting is just “throwing money away.” ”

  1. One of the showers in my GF’s mom’s 14 year home started to leak. I took a look, and it appears to be the cartridge that’s causing the problem. Luckily, we found out that the manufacturer has a lifetime warranty on the part, so we just asked for an exchange. The problem hasn’t been fixed yet – we’re waiting for the part to ship, but imagine the costs if it wasn’t under warranty, and I couldn’t help? Part: $165 +tax from local store. Plumber: $100-200? Imagine plopping down $400 for a small leak.
    Other things on their list:
    – Broken Oven (the stove works). Cost: $1-2K to replace. I could buy a control board for $350, but there’s no guarantee that it will fix things.
    – Electrical outlet that doesn’t work – cost: ?
    – Who knows what else? I don’t live there.
    I’m guessing that home maintenance budgetting should be around $2-3k per year for homes older than 10 years.

    • Agreed about the maintenance budget; my parents have lived in their old-timer house for the last 20-some years, and I’ve worked out that on maintenance (not counting upgrade renovations, such as a high-efficiency furnace and on-demand water tank), they’ve averaged about $3K per year. Some years there’s almost no maintenance (aside from what my Dad can do with his or my “free” labour), and other years a gigantic bill (eg, roof, drainage, rotting garage, etc.).

  2. If they got a good location then I guess they just need to get through this rough patch and their condo price will roar and take care of the problem. 🙂 As the bulls keep saying, you gotta be in it to win it.

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