I have a scenario that I would love another opinion on. I have asked about this property before, but I have not included my numbers before. I have a rental in Sherrelwood, CO that I owe 107,000 on. The total mortgage, taxes, insurance and all is $738. I have had it rented out for 1000. My renter just moved out, so I have the choice of selling it or renting it out for 1100 maybe 1200. If I sell, I think I will get 190,000. The house is a C in a C neighborhood. If I sell it, I will plan to use the approximately 65,000 to try and find a 3bed 2bath for around 330,000 in a better part of town. The house is directly across the street from HWY 36. Basically, should I keep a slightly better cash flow in a poor location or try my luck in a better part of town? Thanks in advance for the responses!
Is it worth putting some $$ into and selling for a higher price? There is some stuff in the mid to high $200s in that neighborhood. Depending on condition and where the home is at with MAJOR repairs, I'd probably hold onto it. If things are getting old, etc, then I'd look into trading up. Just don't go to high as it makes it a bit more difficult to cash flow.
You are planning a 1031 exchange, correct? If so, I have a great guy to help facilitate if you need it.
Your rent is too low based on the value of the property. The fact that you have $80K in equity dead in the property is also killing your cash flow. Long term this will always be a negative cash flow property.
I would sell but not sure $330K properties will cash flow either.
I do not think it would be worth the extra cash. That whole neighborhood funnels from okay houses down to fairly crummy, and I am as far down as you can go. There is a feral cat lady on one side and a guy trying to start his own junkyard on the other. However, that is the catch 22. I can still cash flow okay on it. The major repairs would include windows, water heater, and minor foundation work. My wife and I are leaning on the trading up side. Thank you @Matt M. for chiming in on the last few posts of mine.
Thank you @Thomas S. . I would agree with you, but are you familiar with the denver market? I feel like the 2% test is more like the 0.2% test here. If I were single, I would consider moving to a place I could buy a few houses with cash.
Not a bad time to sell some dog properties, I sold one earlier this year that performed fine but just wasn't something I wanted to have long term. If you 1031 I can see doing it, if you just cash out it makes it hard to get a simular return in a different vehicle especially after taxes.
I know the market here isn't easy but a $330k property likely doesn't perform real well even with 20% down.
Joe, remind me how long you lived there and how long ago that was?
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