Question: I own a condominium in Jersey City, New Jersey. I have a mortgage balance of $53,000 at a 7.50 percent rate. I am not interested in refinancing but I am considering moving and turning the condo into a rental.

If I sell, I'm pretty sure I could get $150,000 for the unit. If I rent, I should be able to get $1,150 per month. Most two-bedroom units are renting for $1,000 but my unit is much bigger. Including the condo fee, I pay $922 per month, so I could have a nice positive monthly cash flow.

However, I am concerned about keeping it rented. There are problems with the boiler in the winter and sometimes we have no heat. Management won't fix it! Also, it's a noisy unit -- I can hear the people above me walking across the floor.

So my question remains: Should I stay or should I go? Other owners are telling me to hold on to it and that the unit will keep going up in value. Any advice is greatly appreciated.

Answer: Wow. I don't know how to answer your question. In reading your comments, it appears you may be living in a condominium that is at best, poorly managed, and at worst, underfunded. No heat in the winter? That's pretty serious. It appears that your homeowner's association has no money or the building is suffering from poor management.

Noise is a pretty common problem in condos. Some buildings are made better than others, and some isolate sound better than others.

It sounds to me that you have made your decision to move. The question is whether you should sell or rent. My advice is to explore these options in a bit more detail. Let's look at the option of renting.

First, you need to find out what's going on with the property management. Read the latest financial report. Call the president of the homeowner's association and ask him or her why the boiler isn't being fixed. Get an understanding of the financial health of the association. Call the management company that's hired by the homeowner's association and ask them the same questions.

If your research shows that the association is in financial good health but the management company is shirking its responsibilities, you need to lobby the board of directors to hire a new property management company. If your research shows that the association doesn't have any money, you have a bigger problem. No money leads to maintenance problems, increased condo fees and special assessments. These things do not help property values.

You also need to increase your research on the rental market. How sure are you that you can secure a lease for $1,150 per month? Is there strong rental demand, not just in the building but in the neighborhood?

Now let's look at selling. How strong is the sales market in your building? Are units selling quickly or becoming stagnant on the market? By most accounts, the nationwide real estate sales market continues to be brisk, so now might be a good time to sell.

It's also important to consider the money that's tied up in your unit. If you move without selling, do you have enough liquid savings for a reasonable down payment on a new home? After selling costs and paying off the mortgage, you have about $85,000 in equity that could be turned into cash. You need to carefully examine whether or not you want that much money tied up in a condo that has a broken boiler.

My knee-jerk advice would be to sell, take your cash and move on. But my reasonable advice would be to take the steps mentioned in this column -- educate yourself on the facts and you'll be able to render the best decision.

Published: June 10, 2004

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, the president of PMC Mortgage Corporation in Alexandria, VA, is a mortgage columnist whose work has appeared in numerous consumer, real estate, and mortgage publications. Mr. Savage welcomes your questions for possible use in this column, however because of the volume of mail received, Mr. Savage cannot answer questions individually.