How Should I Handle This Situation? Sell vs. Rent out

4 Replies

In 2014 I inherited a property that was purchased for $38k 20 years ago in Pittsburgh, PA. The house needs some work but its market value is around $100k and the ARV is around $180k. Great location. As I look at the numbers, I don't know if I should take time/energy to renovate it or sell it and move on.

Rents in that area around $1200/m after renovations but when I look at the math, $14k per year in rental income with about $8k a year in taxes and insurances (not even mentioning maintenance), which doesn't seem too profitable.  

1. Would you sell this property or keep it as a rental property?

2. Although I have a lot of equity, I'm in the middle of repairing credit - which limits HELOCs and home refinancing - is there an alternative financing that would make sense?

3. Is there anything else that I should consider?

Any assistance would be greatly appreciated.  

$8k in taxes and insurance??? Wow... with the rent being $1200, you could only make a maximum of $6k (excluding management, maintenance, cap ex, etc...). Something's gotta give though. Is the property properly tax assessed? If those were the numbers for everyone then almost nobody would be able to make money.

I would probably sell it now for 100K depending on how much time and money it would take to see a ARV of $180K. You must determine what your time is worth.

It is definatly not worth keeping.

I'd sell and use the cash for down payments on 4 100k doors that are ready to go OR use the 100k to buy something for 50k put 25k in rehab then finance it and get your money back (BRRRR) Good luck!

@Kenneth Peagler

You inherited the house in 2014 - What have you done with the house over the past 4 years? has it been vacant all this time?

Having a house currently valued at $100,000 with an ARV of $180,000 sounds great.
How much time and money do you need to spend to get it to the ARV price?

I would also look at the property tax and insurance figures. I don't think those 2 expenses should cost that much.