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Updated almost 6 years ago on . Most recent reply

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Chris Lambert
  • Washington, DC
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Keep renting it or sell it?

Chris Lambert
  • Washington, DC
Posted
Hello BP, I am still new to BP and this is my first time really seeking advice. I have a rental SF home in Virginia. The home has a positive cash flow of $200/month and I have excellent tenants who treat the home as if they own it. The lease doesn’t expire until 8/19 and I feel as is these particular tenants will renew and want to rent here for a very long time. Property values in the area have surged recently which created my dilemma. I could sell the home and clear 100k+. The home is in fine condition but big expenses are coming (roof being the biggest). Do I replace the roof and keep renting it for the long term, or do I sell and use the profits to buy two more properties?

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Regardless of your decision you need to pull out the money since your equity now is either earning next to no return or it is killing your cash flow and turning the property into a liability. My guess is that the rent is far too low for the value of the property and it is therefor no longer a smart investment. 

On the surface it is a property I would definatly liquidate based on solid business practices.  Appreciation speculators would probably advise to hold however I have learned you can not buy food or pay your bills with dead equity and accessing it results in the property no longer being a positive investment.

When a property does not produce cash flow with a hypothetical 100% financing it will never produce true positive cash flow. It is only your own money that is buying your income.

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