Sell...Or Hold? The Capital Gains Question...
To sell or hold, that is the question!
I own a few properties in Northern Colorado, one of which i lived in for two FULL years before moving out. I've owned that property for 4 years now and currently rent it out to some students.
My current cap rate is right around 8%. It was much better but appreciation in the front range of Colorado has been insane. Over the 4 years I've owned this place, the value has increased by 64% (with no signs of slowing down in the next couple of years).
My goal is to continue to buy-hold, in this market as well as others, but it is getting very expensive to continue to buy new properties in my area. If i sell this property within the next year or less, i will be able to avoid capital gains tax. I net about $700 a month after my mortgage.
I don't "need" the liquidity really but you have to imagine that maybe at some point, the growth begins to flatten a bit. That said, would you take the money tax penalty-free and run (maybe reinvest it elsewhere) or would you hold on to a pretty good property that pays you cash each month?
What would you do??
Most Popular Reply
@Jeremy Clarke I'm in a similar situation and I've made the decision to hold. I have a long-term outlook and the time and energy it would take to replace that investment in a similarly hot and appreciating market (Austin) is not worth it in my opinion. Because of when I purchased that property (around when you did) and because it was owner occupied, I have a 3.25% 30-year fixed-rate mortgage which i certainly won't be able to get again now.
I've thought about selling at times but then bring myself back to stay the course of my original plan which is working. I hope that helps.