Negative Cash Flow Rental in Texas — Sell, 1031, or Hold?

Dallas, Texas
Buying & Selling Real Estate
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Negative Cash Flow Rental in Texas — Sell, 1031, or Hold?

Raja Shan
Member since 2024 · 10 posts · 2 votes

Hello everyone,

Need some honest feedback from experienced investors here.

I bought a newer construction rental in Anna, TX back in 2022 for ~$466K (3000+ sq. ft.). Current estimated value is around ~$445K, with a remaining loan balance of ~$325K.

At the time, my thinking was:

  • property appreciation would continue
  • interest rates would eventually drop so I could refinance later

But as we all know, the exact opposite happened.

Current numbers:

  • Interest rate: 6.25%
  • Total monthly carrying cost: ~$2,828 (P&I + insurance + HOA + property tax)
  • Current rent: ~$2,745

So on paper, the property is already negative cash flow even before maintenance, vacancy, turnover, leasing fees, repairs, capex, etc.

To make matters worse, the previous tenant abandoned the property, which created another financial hit.

With all this chaos, here’s what I’m debating (in preferred order):

  1. Sell now (even if it means taking a loss) and redeploy the capital elsewhere. I’m strongly leaning this direction given the rising property taxes, insurance costs, and honestly, remote landlord fatigue. Emotionally, I’m pretty done with it as well.
  2. 1031 into something more passive.
  3. Hold long term and hope appreciation eventually catches up.

Curious how experienced landlords would evaluate this from a return-on-equity and long-term portfolio perspective.

Appreciate all advice and perspectives.

1Reply
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Most Popular Reply

Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
5mo

@Raja Shan

If you can tolerate the negative cash flow and any expenses down the road, you could come out the other side ok if there's some decent appreciation on the property, as @Steve Garthe said. Don't forget that you are also benefiting from the return of principal with each loan payment. It's a slow boat to success. But it works. If not, and you decide you want to sell, you could reinvest into something with a better cash flow potential, but the 1031 exchange is only going to be needed when there is a capital gains tax or depreciation recapture over the amount of your sale.

If you do have some capital gain or depreciation recapture on the property, and are done with active real estate but don't want to pay the tax, there are passive opportunities that qualify for 1031 treatment, such as DSTs (Delaware statutory trust) or UPREITs.

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  • Steve Garthe
    Real Estate Broker · Des Moines, WA · Member since 2025 · 57 posts · 21 votes
    5mo

    Before deciding whether to sell, 1031, or hold, I'd want to understand whether the negative cash flow is primarily a property issue or a financing issue.

    At a 6.25% rate, you're actually sitting on financing that many investors would consider attractive in today's environment. If the property is still significantly negative despite that, I'd be looking closely at local rent growth, taxes, insurance, HOA costs, and the long-term outlook for that specific submarket.

    Personally, I'd calculate three things:

    1. Current return on equity.
    2. Expected appreciation over the next 3-5 years.
    3. What the same equity could realistically earn if redeployed elsewhere.

    Sometimes a property with negative cash flow still wins when appreciation and equity growth are factored in. Other times the equity becomes trapped capital that could perform much better in another asset.

    Has the area continued to see population and job growth since you purchased, or have market fundamentals started to soften?

    1Reply
  • Raja Shan
    OP
    Member since 2024 · 10 posts · 2 votes
    5mo

    Thanks for your reply! Current ROE is approximately -0.8% (annual cash flow is negative ~$2,800, with roughly $350K of equity tied up in the property).

    I don't expect meaningful appreciation in the near term. Even if there is some appreciation, I believe it will be limited given the significant new construction inventory in the area and the incentives/builder discounts being offered to attract buyers.

    Additional headwinds include rising property taxes, increasing insurance costs, and ongoing maintenance expenses. If that same $350K of equity were deployed in a low-cost S&P 500 index fund, the expected long-term return profile would likely be significantly better

    0Reply
  • Denver McClurePro Member
    Financial Advisor · Flower Mound, TX · Member since 2018 · 661 posts · 480 votes
    5mo

    Hey @Raja Shan, happy to help analyze the property and recommend a solution. I'm also in DFW, so I'm happy to hop on a quick call sometime or grab coffee. 

    [email protected]
    0Reply
  • Rick Albert
    Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    5mo

    Here is my honest feedback:

    1. New construction has its benefits, but appreciation isn't one of them in the short term. You paid a premium for brand new everything but now you are trying to sell used goods. Plus in Texas where there is a lot of construction going on, there is likely plenty of newer inventory that you are competing with.

    2. Double check with your CPA but you may not need to do a 1031 exchange unless you want to avoid paying back depreciation. You get taxed on the gains, which in your case is zero to negative.

    3. Factor in tax benefits and loan buy down when you hold. It's a way to see how much of a loss you are really taking. That's what makes real estate interesting. You are making money in multiple ways.

    4. Can you pivot and turn the property into a mid-term or short-term rental? Any upside there?

    5. Can you make any improvements to increase the rents? For example add extra bedrooms.

    6. What could you invest in that would be more passive? A DST? Although a potential option, they have upfront fees and if they are equal to or more than what you would get taxed, it's not worth it. Might as well keep the cash.

    7. Could you move into it and turn it into a primary residence?

    My take, real estate is a cycle and takes time. I've noticed it takes about two years for a property to stabilize but then we got hit with the recent economic trends. Hold onto it long enough and you will likely survive. Years from now you are going to look back and people are going to be jealous of you. Think about your grandparents who are still in the same house from 50 years ago and they pushed the envelope on what they could afford.

    The only reasons why I would consider selling are (1) you are not in a path of progress and you don't see appreciation in value or rents happening anytime soon or (2) you don't pay any taxes and you need the cash so you sell and put the money into a high interest savings account, T-bills, whatever until you can catch your breath. 

    Hope this helps.

    2Reply
  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 971 votes
    5mo
    Quote from @Raja Shan:

    Hello everyone,

    Need some honest feedback from experienced investors here.

    I bought a newer construction rental in Anna, TX back in 2022 for ~$466K (3000+ sq. ft.). Current estimated value is around ~$445K, with a remaining loan balance of ~$325K.

    At the time, my thinking was:

    • property appreciation would continue
    • interest rates would eventually drop so I could refinance later

    But as we all know, the exact opposite happened.

    Current numbers:

    • Interest rate: 6.25%
    • Total monthly carrying cost: ~$2,828 (P&I + insurance + HOA + property tax)
    • Current rent: ~$2,745

    So on paper, the property is already negative cash flow even before maintenance, vacancy, turnover, leasing fees, repairs, capex, etc.

    To make matters worse, the previous tenant abandoned the property, which created another financial hit.

    With all this chaos, here’s what I’m debating (in preferred order):

    1. Sell now (even if it means taking a loss) and redeploy the capital elsewhere. I’m strongly leaning this direction given the rising property taxes, insurance costs, and honestly, remote landlord fatigue. Emotionally, I’m pretty done with it as well.
    2. 1031 into something more passive.
    3. Hold long term and hope appreciation eventually catches up.

    Curious how experienced landlords would evaluate this from a return-on-equity and long-term portfolio perspective.

    Appreciate all advice and perspectives.


    I'd look at it through a return-on-equity lens rather than a "hope it comes back" lens. If you were handed this property today with negative cash flow, rising expenses, landlord fatigue, and limited appreciation so far, would you buy it? If the answer is no, that tells you a lot. Holding can work if you have strong conviction in the market and don't mind feeding the property, but there's also nothing wrong with taking a small loss and reallocating capital into assets with better cash flow and less stress. A lot of investors have been making that exact move from higher-priced markets into Midwest markets where the rent-to-price ratios are stronger, and the numbers work from day one. At the end of the day, your portfolio should serve your goals, not become a monthly obligation you're constantly trying to justify.
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    1Reply
    • Raja Shan
      OP
      Member since 2024 · 10 posts · 2 votes
      5mo
      Quote from @Arman Ahmed:
      Quote from @Raja Shan:

      Hello everyone,

      Need some honest feedback from experienced investors here.

      I bought a newer construction rental in Anna, TX back in 2022 for ~$466K (3000+ sq. ft.). Current estimated value is around ~$445K, with a remaining loan balance of ~$325K.

      At the time, my thinking was:

      • property appreciation would continue
      • interest rates would eventually drop so I could refinance later

      But as we all know, the exact opposite happened.

      Current numbers:

      • Interest rate: 6.25%
      • Total monthly carrying cost: ~$2,828 (P&I + insurance + HOA + property tax)
      • Current rent: ~$2,745

      So on paper, the property is already negative cash flow even before maintenance, vacancy, turnover, leasing fees, repairs, capex, etc.

      To make matters worse, the previous tenant abandoned the property, which created another financial hit.

      With all this chaos, here’s what I’m debating (in preferred order):

      1. Sell now (even if it means taking a loss) and redeploy the capital elsewhere. I’m strongly leaning this direction given the rising property taxes, insurance costs, and honestly, remote landlord fatigue. Emotionally, I’m pretty done with it as well.
      2. 1031 into something more passive.
      3. Hold long term and hope appreciation eventually catches up.

      Curious how experienced landlords would evaluate this from a return-on-equity and long-term portfolio perspective.

      Appreciate all advice and perspectives.


      I'd look at it through a return-on-equity lens rather than a "hope it comes back" lens. If you were handed this property today with negative cash flow, rising expenses, landlord fatigue, and limited appreciation so far, would you buy it? If the answer is no, that tells you a lot. Holding can work if you have strong conviction in the market and don't mind feeding the property, but there's also nothing wrong with taking a small loss and reallocating capital into assets with better cash flow and less stress. A lot of investors have been making that exact move from higher-priced markets into Midwest markets where the rent-to-price ratios are stronger, and the numbers work from day one. At the end of the day, your portfolio should serve your goals, not become a monthly obligation you're constantly trying to justify.

      Exactly my thinking! I need the asset to serve me not the other way. 

      0Reply
  • Raja Shan
    OP
    Member since 2024 · 10 posts · 2 votes
    5mo

    Thanks and I agree with many of your points. I look at real estate somewhat like any other investment asset. I don’t panic sell, but I do believe the real economics should drive the decision: capital appreciation, rent growth that beats inflation, tax benefits, opportunity cost etc.

    Could the property appreciate meaningfully 5–10 years from now? Maybe, but my bigger concern is trapped equity. If the property is producing weak or negative cash flow today, appreciation is uncertain, and expenses like property taxes and insurance continue rising, then I have to ask whether that equity could produce better long-term value elsewhere with less operational burden. That’s really the lens I’m trying to use.

    0Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5mo

    @Raja Shan

    If you can tolerate the negative cash flow and any expenses down the road, you could come out the other side ok if there's some decent appreciation on the property, as @Steve Garthe said. Don't forget that you are also benefiting from the return of principal with each loan payment. It's a slow boat to success. But it works. If not, and you decide you want to sell, you could reinvest into something with a better cash flow potential, but the 1031 exchange is only going to be needed when there is a capital gains tax or depreciation recapture over the amount of your sale.

    If you do have some capital gain or depreciation recapture on the property, and are done with active real estate but don't want to pay the tax, there are passive opportunities that qualify for 1031 treatment, such as DSTs (Delaware statutory trust) or UPREITs.

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    2Reply
  • Aaron ZimmermanBusiness Member
    Accountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
    5mo

    Easy decision. Sell. Negative cash flow before PITI is a huge red flag that's hard to overcome. Cut your losses and redeploy the capital for better use

    [email protected]
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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    5mo
    Quote from @Raja Shan:

    Hello everyone,

    Need some honest feedback from experienced investors here.

    I bought a newer construction rental in Anna, TX back in 2022 for ~$466K (3000+ sq. ft.). Current estimated value is around ~$445K, with a remaining loan balance of ~$325K.

    At the time, my thinking was:

    • property appreciation would continue
    • interest rates would eventually drop so I could refinance later

    But as we all know, the exact opposite happened.

    Current numbers:

    • Interest rate: 6.25%
    • Total monthly carrying cost: ~$2,828 (P&I + insurance + HOA + property tax)
    • Current rent: ~$2,745

    So on paper, the property is already negative cash flow even before maintenance, vacancy, turnover, leasing fees, repairs, capex, etc.

    To make matters worse, the previous tenant abandoned the property, which created another financial hit.

    With all this chaos, here’s what I’m debating (in preferred order):

    1. Sell now (even if it means taking a loss) and redeploy the capital elsewhere. I’m strongly leaning this direction given the rising property taxes, insurance costs, and honestly, remote landlord fatigue. Emotionally, I’m pretty done with it as well.
    2. 1031 into something more passive.
    3. Hold long term and hope appreciation eventually catches up.

    Curious how experienced landlords would evaluate this from a return-on-equity and long-term portfolio perspective.

    Appreciate all advice and perspectives.


    Why would a 1031x apply for this scenario? 
    - What capital gains are you looking at?
    - How much depreciation will you have to settle?

    No one can predict the future, but it only matters what YOU think will happen with value & rent appreciation and expenses.

    Something else to think about:
    I bought a Class A property years ago, and even at a discount, it negative cashflowed. 
    I understood that, but looked at it like a monthly 401k contribution.
    Now, it's one of my best properties - I even did a cashout refi in 2021 and got a 4% rate.
    Used the funds as the downpayment to buy 4 Class B duplexes.

    [email protected]248-209-6824
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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    5mo

    Hey Raja, you've gotten some great advice and answers so far, I just wanted to add a few notes from a tax perspective.

    I really like the numbers that Seph told you to run and like Dave said sometimes it is a "slow boat to success" but it works, but you do need to make sure it is working for you from a tax perspective too.

    If you sell, like others mentioned, don't forget depreciation recapture. The upside is that any suspended passive activity losses from your negative cash flow get released at sale and can offset ordinary income. On the 1031, since you're near or below your purchase price, there may not be enough gain to make the complexity worth it. On holding, depending on your AGI, you may be able to deduct up to $25K of those passive losses annually against ordinary income, but if you're over $150K, they just keep stacking until you sell.

    Another thing to consider is whether you're able to rent room by room to get a little bit more income on the property, or whether you're able to turn this into a short-term rental. You didn't mention anything about your other income streams, but a lot of people get into real estate thinking about the passive income and not thinking about what they could potentially offset their other income streams by turning that passive income non-passive through Real Estate Professional Status or the STR loophole.

    Whatever direction you go, running the full tax picture with a CPA before you make any moves is really important here. You don't want to miss out on any tax saving opporutnities whether you sell or decide to hold. Happy to connect!

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  • Fulton Abraham Sanchez
    CPA| New Clients Welcome| 50 States · Member since 2016 · 440 posts · 97 votes
    5mo

    @Raja Shan, hi. From a CPA/investor perspective, the numbers and fatigue seem to point in the same direction. If the property is negative before real reserves, compare your equity against what it could earn elsewhere.

    A 1031 only makes sense if it moves you into a better asset, and a sale at a loss may reduce the tax benefit. I’d run an after-tax sell vs. hold analysis, but selling or exchanging into a stronger asset sounds reasonable

    0Reply
  • Raja Shan
    OP
    Member since 2024 · 10 posts · 2 votes
    5mo

    Thanks everyone. I ran the numbers, including depreciation recapture and suspended passive losses, and the tax impact looks manageable. Weak cash flow, equity tied up, and no real need for a 1031, I’ve decided to move forward with the sale and redeploy the capital elsewhere.

    Really appreciate all the input.

    1Reply
  • Nigel Jackson
    Cincinnati, OH · Member since 2026 · 23 posts · 9 votes
    5mo

    Before you decide between selling, 1031ing, or holding, I’d run the full tax cost of a sale first.

    You mentioned the property is worth approximately $445,000 with a $325,000 loan balance, but the number that matters for the tax calculation is your adjusted basis  , original purchase price plus closing costs plus any capital improvements, minus depreciation claimed since 2022. If you’ve been taking depreciation for the last two to three years, your basis is likely lower than you think, which means the tax result may look very different from the equity calculation.

    If you’re selling at a loss relative to adjusted basis, the loss on a rental property is generally a Section 1231 loss rather than a capital loss. In many cases, that means it can offset ordinary income, which is a much different outcome than most investors expect.

    On the 1031 specifically, it only makes sense if there’s a gain worth deferring. If you’re selling at a loss relative to adjusted basis, a 1031 usually provides little benefit because there is no gain to defer.

    A 1031 into another negative-cash-flow asset doesn’t fix the underlying issue; it just defers a tax bill while keeping the headache.

    1Reply
  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 914 votes
    5mo

    Adding a tax angle to the great advice already here. If you sell, remember that the depreciation you've taken lowers your basis, so you can still owe tax tied to that depreciation even if you sell for less than you paid. The upside is that all of those suspended passive losses you've been stacking up from the negative cash flow get freed up in the year you sell, and they can offset your other income, including W-2 or business income. Since you're sitting right around your purchase price, there may not be enough gain to make a 1031 worth the complexity, so I wouldn't force one just to do it. If you hold instead, those passive losses generally keep parking until you sell once your income is above the $150k range, though some investors convert the property to a short-term rental or rent by the room to make the losses usable now. Either way, run the full picture with your own CPA before you move, since the right call really comes down to your specific numbers.

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  • Raja Shan
    OP
    Member since 2024 · 10 posts · 2 votes
    5mo

    Yes to this - 'suspended passive losses you've been stacking up from the negative cash flow get freed up in the year you sell, and they can offset your other income...'

    I've to clarify that I do have few other rentals and I'm selling only the one that is not meeting my numbers now, and I'm confident they won't in the coming years either.

    0Reply
  • Stephen Delahoussaye
    Real Estate Broker · Nashville, TN · Member since 2022 · 163 posts · 87 votes
    5mo

    Raja this is a situation I see more than people want to admit. A lot of investors bought in 2021 and 2022 banking on appreciation and rate drops and now they are upside down on cash flow with no clear exit.

    I run a property management company in Nashville and manage 23 doors so I see this play out regularly. A few things to consider before you make a move.

    First, how tight is your management? A lot of owners bleeding cash are actually leaving money on the table through poor tenant screening, slow turnover, or not pushing rents at renewal. On a 3000 sq ft newer build in a growing DFW suburb you might have more rent upside than you think especially if you have been sitting at the same rate since lease signing.

    Second, the 1031 only makes sense if you have a clear target property lined up that actually cash flows. Trading one problem for another in a rush is worse than holding and optimizing what you have. I have seen investors 1031 into something they did not fully underwrite and end up in the same spot six months later.

    Third, selling at a loss right now means you are locking in the pain. If you can cover the gap out of pocket for another 12 to 18 months while rents in that corridor continue climbing you might be in a completely different position.

    The real question is whether this property fits your long term strategy. If you bought it as a rental and the fundamentals of the area are strong then tightening operations and being patient is usually the right call. If it was a speculative play that did not work out then cut it and redeploy.

    0Reply
  • Jon Hegreness
    Real Estate Agent · Cave Creek, AZ · Member since 2026 · 11 posts · 9 votes
    5mo
    A few thoughts on each path. None of these is the wrong answer; it depends on what is actually true for you outside the spreadsheet. Sell: Best move if (a) you do not need real estate exposure anymore, (b) you have other places that pay more attention to your dollar, or (c) the negative cash flow is bleeding the rest of your portfolio and you cannot wait it out. The clean exit. Pay the tax, take the cash, move on. People underrate how much energy a negative-cash-flow property eats. Sometimes the highest return move is putting the cash and the attention somewhere else. 1031: Best move if (a) you still want real estate exposure, (b) you can find a property that actually pencils in your target market in the 45-day identification window, and (c) your tax bill on a straight sale would be painful. The trap is the timeline. The 45-day identification clock is short, and the 180-day close clock is unforgiving. People force the trade because they do not want to write the check to the IRS, and end up trading a bad rental for a different bad rental. Only do the 1031 if you have a real candidate ready, not a hope. Hold: Best move if (a) the negative cash flow is small and the appreciation thesis is intact, (b) you have a clear path to rent increases or refi when rates come down, (c) your basis and depreciation still make the holding period work for you at tax time, or (d) you are close to a major Texas market that you genuinely believe in long term. Holding requires patience and discipline. If you cannot stomach 12 to 24 more months of slow bleed without selling other things to cover it, do not hold. Negative cash flow becomes more painful, not less, when you have to keep funding it from outside. Two questions I would ask before making the call. 1. What did underwriting look like on day one? If the pro forma showed negative day-one cash flow and you bought it anyway, the strategy was always appreciation or 1031. If the pro forma showed positive cash flow and you ended up here, something changed (taxes, insurance, vacancy, repairs). Diagnose that first, because the same problem follows you into the next property. 2. Where are you in life? An exchange forces you to commit another big chunk of time and attention. If you have other things you want to focus on, that matters as much as the math. Whatever you decide, get an independent eye on it before you act. A CPA who actually does real estate, not just generic returns, and an agent who does investor work in the actual market you would be exchanging into. Both are worth their fees on a deal this size.
    1Reply
    • Raja Shan
      OP
      Member since 2024 · 10 posts · 2 votes
      5mo
      Quote from @Jon Hegreness:
      A few thoughts on each path. None of these is the wrong answer; it depends on what is actually true for you outside the spreadsheet. Sell: Best move if (a) you do not need real estate exposure anymore, (b) you have other places that pay more attention to your dollar, or (c) the negative cash flow is bleeding the rest of your portfolio and you cannot wait it out. The clean exit. Pay the tax, take the cash, move on. People underrate how much energy a negative-cash-flow property eats. Sometimes the highest return move is putting the cash and the attention somewhere else. 1031: Best move if (a) you still want real estate exposure, (b) you can find a property that actually pencils in your target market in the 45-day identification window, and (c) your tax bill on a straight sale would be painful. The trap is the timeline. The 45-day identification clock is short, and the 180-day close clock is unforgiving. People force the trade because they do not want to write the check to the IRS, and end up trading a bad rental for a different bad rental. Only do the 1031 if you have a real candidate ready, not a hope. Hold: Best move if (a) the negative cash flow is small and the appreciation thesis is intact, (b) you have a clear path to rent increases or refi when rates come down, (c) your basis and depreciation still make the holding period work for you at tax time, or (d) you are close to a major Texas market that you genuinely believe in long term. Holding requires patience and discipline. If you cannot stomach 12 to 24 more months of slow bleed without selling other things to cover it, do not hold. Negative cash flow becomes more painful, not less, when you have to keep funding it from outside. Two questions I would ask before making the call. 1. What did underwriting look like on day one? If the pro forma showed negative day-one cash flow and you bought it anyway, the strategy was always appreciation or 1031. If the pro forma showed positive cash flow and you ended up here, something changed (taxes, insurance, vacancy, repairs). Diagnose that first, because the same problem follows you into the next property. 2. Where are you in life? An exchange forces you to commit another big chunk of time and attention. If you have other things you want to focus on, that matters as much as the math. Whatever you decide, get an independent eye on it before you act. A CPA who actually does real estate, not just generic returns, and an agent who does investor work in the actual market you would be exchanging into. Both are worth their fees on a deal this size.

      Loved your thoughtful response. The maintenance burden, stress fatigue and do I really need this given where I'm in life all matter just as much as the raw numbers. 

      Your post prompted me to build a simple decision checklist and scorecard for the Hold vs. Sell vs. 1031 decision. It helped me step back from the emotions, one more time and evaluate the investment more objectively. Sharing it below in case it helps someone else facing a similar decision. 

      FactorHoldSellReason




      Better Use of Capital010Sale unlocks decent $ that can be deployed elsewhere
      Cash Flow28Property is barely breaking even before repairs and turnover costs; returns on equity are weak.
      1031 Exchange Attractiveness010No meaningful gain to defer and no superior replacement asset identified.
      Appreciation Thesis55Area remains attractive long-term, but appreciation has not materialized as originally expected.
      Rent Growth Potential37Limited upside; current rent has potential to go up but  unlikely to move enough to change economics. Rent increase means tenant turnover as well...
      Refinance Potential46Refinancing an option whenever that can happen but won't move the needle much
      Maintenance Burden28Larger lot increases upkeep; prior tenant abandonment and property damage add risk and fatigue.
      Tenant Turnover Risk19Large yard narrows tenant pool; turnover has already been a recurring issue.
      Original Investment Thesis19Original thesis relied heavily on appreciation and future refinancing; neither played out as expected.
      Tax Impact of Sale37Released passive losses largely offset estimated depreciation recapture; tax impact is manageable.
      Life Stage / Attention010Capital and mental bandwidth may be better spent on career, investing, and other opportunities.
      Emotional Attachment82Desire to hold long-term and potentially pass to children is the strongest argument for keeping it.
      Opportunity Cost19equity is earning a relatively low return in the property versus alternative investments.
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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5mo

    Are you able to find something that would work better?  My guess is no.  I'd hold it for another year or two and see where you are at.  No one can predict the future, but generally speaking, rents go up gradually over time.  yes expenses do as well.  I had places that didn't cash flow when I bought them (they were close), but over time rents went up (as did house prices) and now they cash flow nicely.

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    5mo

    Hope + Investing should not belong in the same sentence.

    1031 exchange does not make sense in this case since the property does not have a taxable gain. If you sell at a loss, it might provide some relief by reducing your taxable income.

    I would sell the property and look to acquire another property.

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