Buy & Hold Condo or Sell
I currently have (1) rental property. It was my primary property for (3) years. It is a condo which is currently appraised for 80k and I owe 55k ( 15 year mortgage @ 3%). I have a great tenant who is going to sign another year lease in October 2017. However it doesn't cash flow a ton of money ($600 yearly) and I believe 80k is close to the ceiliing in terms of appreciation. I like the fact that she is paying down my mortgage, but would it make more sense to sell and put equity into another rental property that cash flows better. My goal is to build a real estate investment portfolio and build financial wealth. The current tenant would also be interested in buying if I decided to sell. Any feedback or comments would be greatly appreciated.
Most Popular Reply
Condos are tough- usually there is a cap to their appreciation, you own little or no land and have little say in improvements. That said, run the numbers on how much you would walk away with if you sold. I'm guessing after paying a realtor, depreciation recapture, capital gains, etc, it probably won't be much. Could you use that money to put a down payment on another property that would provide significantly better cash flow than what you are getting? Spend some time searching the MLS and run some hypothetical numbers using your cash as a down payment.
From your post, I assume you have 12 years left on your mortgage? If so, it might be a better option to raise rent when you can, as aggressively as you can, and pay that mortgage off asap. Sounds like this isn't the best rental, but it's a great learning experience and you can use it to help inform your next investment. Best of luck!
- Corby Goade