To sell or not to sell

9 Replies

Hello bigger pockets members, I started buying real estate for the purpose of buy and hold investing. I bought two property's in the last year and a half at 30% below market value and have been renting them at about 1.75% of the 2% rule. Over the last year home values in this area have increased 40%. I have one property listed for rent now. A prospect tenant asked if I would do a land contract. Should I sell now and take a 70% increase on purchase price? If so should I put it on the MLS or set up a land contract? Or should continue to rent since cash flowing buy and holds are why I got in the business in the first place? Any thoughts or words of wisdom would be appreciated.

Could you refi and buy more?

That is also an option. Although I'm waiting to buy unless I can find property far below the inflated market value.

If you sold it, how much cash would you walk away with

I owe 60K. Comps in the last few months are about 150. Is capital gains tax still 15% if your a small fish?

if you do not need the cash to live on then i would do a 1031 exchange to avoid paying any capitol gains taxes.

Whatever it is, it's a nice problem to have.  Good luck.

Originally posted by @Benjamin Palasek :
I owe 60K. Comps in the last few months are about 150. Is capital gains tax still 15% if your a small fish?

 Don't sell it.  Refinance it...like it was mentioned above. 

Sell Numbers:
* 90,000 Profit (if you sell full assumed ARV)
* -14,000            15% CG Tax
* -  9,000            6% RE Commission 
* -  4,000            Closing Cost
 $63,000            Walk away.....and no cash flow

      or

REFI Numbers:
* 112,000 Refi 75% of $150k ARV
*  - 60,000        Existing Loan payoff
* $ 52,000        Walk away....and you have your cash flow still coming, and...

you have $52,000 for another property.  

I would agree it makes more sense to refi and buy another property. Hopefully you will also be able to get into something that will also cash flow positively. Over the long haul this will cause you less work, have to buy less number of properties and add to your cash flow totals. You are in for the long haul right? There is nothing like the tried and proven. 

Thank you all! Cash out refinancing is probably what I'll end up doing.

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