To sell now (November 2022) or try to rent it out?

Starting Out
4yFollow

To sell now (November 2022) or try to rent it out?

Shane Benson
Member since 2020 · 22 posts · 17 votes

Hey Guys! 

College student here, graduating December '22 (2 months from now) I will be relocating from Lubbock, TX to DFW area in January (with girlfriend getting a job there, I don't have one lined up yet) 

I have 3 properties total, 2 stabilized rentals, and one larger house that was supposed to be a flip, and I ended up moving into it instead. 

Now I am faced with if i should try to keep the bigger house as a high end rental ($2,500 per month with my market average rent around $1,500) or sell it. 

1. Sell: if I sold, would probably list under market value at 280k projected to NET 60k. I am worried with rates skyrocketing if I can even sell it at that price.

2. Rent: Would love to hold a hopefully appreciating asset in a great neighborhood, but may be hard to keep rented out as its not in a rental neighborhood and above the average price point 

Background that may be pertinent: This house is on a floating rate, 20 year note owe 200k. I have 2 roommates moving out in December (house hacking now) ARV is 300k, updated interior looks great, but have an unfinished basement, and the exterior needs new fascia.

Any help/opinions are greatly appreciated! Really tough decisions here for me. Thanks!

0Reply
24 views

Most Popular Reply

Tony Aliatim
Member since 2022 · 13 posts · 8 votes
4y

Hi Shane,

First, well done as a college student already having a few assets under your belt. 

First question I would ask is, do you need the 60k that you would get after the sale? Also, there are tax considerations to take into account, have you held the property long enough to avoid capital gains? 

If you plan to sell the property, I would look into doing it sooner rather than later as interest rates will continue to rise and selling the property will become harder as the year continues. 

Have you explored selling the house and then using the money to buy two other properties, or even a MF? You could 1031 exchange and avoid paying taxes (you will need to pay the taxes down the road if you pull out the money). 

Otherwise, that high rent is an awesome cash flow opportunity which will be a great safety net as you look for a job.

Hope this helps!

1Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Tony Aliatim
    Member since 2022 · 13 posts · 8 votes
    4y

    Hi Shane,

    First, well done as a college student already having a few assets under your belt. 

    First question I would ask is, do you need the 60k that you would get after the sale? Also, there are tax considerations to take into account, have you held the property long enough to avoid capital gains? 

    If you plan to sell the property, I would look into doing it sooner rather than later as interest rates will continue to rise and selling the property will become harder as the year continues. 

    Have you explored selling the house and then using the money to buy two other properties, or even a MF? You could 1031 exchange and avoid paying taxes (you will need to pay the taxes down the road if you pull out the money). 

    Otherwise, that high rent is an awesome cash flow opportunity which will be a great safety net as you look for a job.

    Hope this helps!

    1Reply
  • Shane Benson
    OP
    Member since 2020 · 22 posts · 17 votes
    4y
    Quote from @Tony Aliatim:

    Hi Shane,

    First, well done as a college student already having a few assets under your belt. 

    First question I would ask is, do you need the 60k that you would get after the sale? Also, there are tax considerations to take into account, have you held the property long enough to avoid capital gains? 

    If you plan to sell the property, I would look into doing it sooner rather than later as interest rates will continue to rise and selling the property will become harder as the year continues. 

    Have you explored selling the house and then using the money to buy two other properties, or even a MF? You could 1031 exchange and avoid paying taxes (you will need to pay the taxes down the road if you pull out the money). 

    Otherwise, that high rent is an awesome cash flow opportunity which will be a great safety net as you look for a job.

    Hope this helps!


     Thanks!
    I wouldn't say I need the 60k now, but it would be nice. Definitely don't "need" it though. 

    I would love to roll it into another investment but I would be afraid of not getting qualified for the new loan as i dont have a W2 income to make it easier. 

    Yes it would be taxed heavily and that would suck if it was not 1031

    Thanks for your help 

    0Reply
  • Tony Aliatim
    Member since 2022 · 13 posts · 8 votes
    4y
    Quote from @Shane Benson:
    Quote from @Tony Aliatim:

    Hi Shane,

    First, well done as a college student already having a few assets under your belt. 

    First question I would ask is, do you need the 60k that you would get after the sale? Also, there are tax considerations to take into account, have you held the property long enough to avoid capital gains? 

    If you plan to sell the property, I would look into doing it sooner rather than later as interest rates will continue to rise and selling the property will become harder as the year continues. 

    Have you explored selling the house and then using the money to buy two other properties, or even a MF? You could 1031 exchange and avoid paying taxes (you will need to pay the taxes down the road if you pull out the money). 

    Otherwise, that high rent is an awesome cash flow opportunity which will be a great safety net as you look for a job.

    Hope this helps!


     Thanks!
    I wouldn't say I need the 60k now, but it would be nice. Definitely don't "need" it though. 

    I would love to roll it into another investment but I would be afraid of not getting qualified for the new loan as i dont have a W2 income to make it easier. 

    Yes it would be taxed heavily and that would suck if it was not 1031

    Thanks for your help 


     If you don't need the money, then I would take the cash flow and save on taxes. Be prepared to see less appreciation over the coming months as prices could continue to correct, but if you are in it for the long term then this doesn't matter. Also, if you buy a new investment, be prepared for interest rates to eat into your gains. 

    My advice, hold your assets, save more money, then buy more if the market correction makes it worth your while :).

    Good luck!

    1Reply
  • Alex Olson
    Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
    4y

    When it comes to deciding whether to do a 1031 exchange or not, it is mostly a simple question. Do you like what the property is giving you? If not, does it help you to upgrade by selling and getting an even better property? I know that is not an easy answer, but completing a 1031 exchange is more simple than people believe and upgrading by using a 1031 exchange is also more simple than people believe. Hope that helps!

    0Reply
  • Joe FunariBusiness Member
    Real Estate Agent · Keller, TX · Member since 2017 · 850 posts · 825 votes
    4y

    @Shane Benson I would advocate keeping those assets. I would suggest that you find a investor friendly realtor in Lubbock to run both sold and rent comps on the flip your living in. No need to guess the numbers. Once you get actual rent numbers then you can see if it cash flows for you. But if it doesn't and you can actually make $60K consider selling it and reinvesting here in the DFW area once you move here. Rentals here in DFW definitely cash flow. But again the sold comps will tell you what you will actually get if you finish the basement and new fascia, etc. A good investor friendly realtor should walk the property and help guide you on what updates need to be finished to get you the sale price based on the comps they give you. then you will be armed with actual numbers. And more importantly how much it will take to get your property to market rates , as well as, how long it will be on the market before it sales. 

    1Reply
  • Ricardo Hidalgo
    Real Estate Agent · Member since 2019 · 569 posts · 257 votes
    4y
    Quote from @Shane Benson:

    Hey Guys! 

    College student here, graduating December '22 (2 months from now) I will be relocating from Lubbock, TX to DFW area in January (with girlfriend getting a job there, I don't have one lined up yet) 

    I have 3 properties total, 2 stabilized rentals, and one larger house that was supposed to be a flip, and I ended up moving into it instead. 

    Now I am faced with if i should try to keep the bigger house as a high end rental ($2,500 per month with my market average rent around $1,500) or sell it. 

    1. Sell: if I sold, would probably list under market value at 280k projected to NET 60k. I am worried with rates skyrocketing if I can even sell it at that price.

    2. Rent: Would love to hold a hopefully appreciating asset in a great neighborhood, but may be hard to keep rented out as its not in a rental neighborhood and above the average price point 

    Background that may be pertinent: This house is on a floating rate, 20 year note owe 200k. I have 2 roommates moving out in December (house hacking now) ARV is 300k, updated interior looks great, but have an unfinished basement, and the exterior needs new fascia.

    Any help/opinions are greatly appreciated! Really tough decisions here for me. Thanks!


     I would see if you can find another property that can be renovated or lot split to have an equity play for the future and see how market shifts. I believe some markets will be affected greater due to lack of demand or excess inventory. If that is something you may experience, I would sell off and wait. 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free