To sell or refinance an existing rental

5 Replies

Hello,
Looking for some advice.

I have a property that has poor cash flow ($50) after all expenses and reserves are considered but it  has good amount of equity in it. It's a 2600 sqft home in a nice area but the schools are not the best so the renters I am getting are multifamily situations. I was thinking of either selling it or taking a line of credit on it to buy more properties and still rent it out without any cash flow but I will still have the property. Any suggestions/thoughts? TIA!

I would sell, it is not a good investment income property and your money could be put to much better use else where. If you have equity in this property you have negative cash flow not positive. Every 100K in dead equity is costing you a minimum of $415/month in lost income. This assumes a mortgage at 5% and the opportunity value of cash at a minimum 10%.

Your property is a very poor investment.

I've been selling my least favorite smalls as they become vacant anyway.  Selling quickly by owner at retail.  I remember when you couldn't sell these for what was owed, so glad to sell in a hot market.

Other than not having good cash-flow, do you like this property @Sheena Varghese ?  When you think about it do you get warm and fuzzy or is it a 'here we go again' feeling?  That would answer the question for me.  Like it? Refi.  Don't?  Sell it!

Thank you both for responding. I am sentimental about this house because it was my primary home but I am more sentimental about losing money 🙂. I think it’s a great time to sell also. Thanks again!

Oh boy, you are entering into dangerous territory when you combine feelings with business. That is a major reason many wannabe investors make bad deals.

Never make any business decision based on feelings, money has no feelings and should be the only consideration.

Don’t worry, I am much more concerned about making financially sound decision than being sentimental. Thank you :)

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