Should we sell our rental now or wait a few years?
Investor · Cypress, TX · Member since 2013 · 403 posts · 59 votes
So I have had a rental property for a year now and it's cash flowing $400 a year. This is my only rental property to date. I'm really eager to get more reserves to get more properties. I have enough for 1, hopefully 2 rentals if I'm careful. I could probably sell the rental right now and pocket about 40k. Or I could wait 3-5 years and it will be paid off since I'm not spending the cash flow and pocket 100k-120k. I'm already leaning towards just being patient but just wanted to get a few other opinions from everyone on here too just incase there is a senerio I'm not seeing yet. Thanks in advance for your reply.
Ben,
Your question is great. I know, because it took me 19 years to figure out the answer.
( You will not find any posts anywhere where I ever claim to be a fast learner.)
My 37 years of real estate investing has taught me (first 19 spent figuring out answer to your question) that decisions like the one you're deciding to make have to be made based on a big picture, overall real estate strategy, i.e. buy and hold, buy and sell, etc.
I floundered and didn't accomplish much until I really had a long talk with myself and decided on a big picture, overall strategy. This incorporates many things including but certainly not limited to, your plans for the future, your plans for retirement, your belief in what is going to happen to values, rates, taxes, etc., and your belief as to what you want your role in your investments to be, just to name a few.
Although the other considerations mentioned by you and others are important, I "saw the light" and truly believe that with a big picture, overall plan in your mind (which could certainly be changed from time to time) you will hopefully accomplish as much as I have in the past 16 years, since my "awakening."
Hope that helps,
Joffrey
HI Ben Hughes,
Did you mean to say it's cash flowing $400 a month (not "a year")?
There are several factors that need to be considered in order to answer that question.
If the cash flow is $400 per month, and you'll have it paid off in 3-5 years, my first question is, why would you want to sell it?
What city is the property located?
Did you mean to say it's cash flowing $400 a month (not "a year")?
There are several factors that need to be considered in order to answer that question.
If the cash flow is $400 per month, and you'll have it paid off in 3-5 years, my first question is, why would you want to sell it?
What city is the property located?
Marco Santarelli, yes meant to say $400 a month. It is located in Katy, TX. The reason I would want to sell it is so I could buy more houses. If I waited and got atleast $100k for it, I could buy/finance 4 houses that cash flow $400/month then I'd cash flow $1600/month. Does that all make sense from a investor standpoint?
Ben,
Your question is great. I know, because it took me 19 years to figure out the answer.
( You will not find any posts anywhere where I ever claim to be a fast learner.)
My 37 years of real estate investing has taught me (first 19 spent figuring out answer to your question) that decisions like the one you're deciding to make have to be made based on a big picture, overall real estate strategy, i.e. buy and hold, buy and sell, etc.
I floundered and didn't accomplish much until I really had a long talk with myself and decided on a big picture, overall strategy. This incorporates many things including but certainly not limited to, your plans for the future, your plans for retirement, your belief in what is going to happen to values, rates, taxes, etc., and your belief as to what you want your role in your investments to be, just to name a few.
Although the other considerations mentioned by you and others are important, I "saw the light" and truly believe that with a big picture, overall plan in your mind (which could certainly be changed from time to time) you will hopefully accomplish as much as I have in the past 16 years, since my "awakening."
Hope that helps,
Joffrey
I think you should trust your initial decision and just be patient for the 3-5 years.You might get better returns if you foresee the market doing even better in the next several years.
Your question is great. I know, because it took me 19 years to figure out the answer.
( You will not find any posts anywhere where I ever claim to be a fast learner.)
My 37 years of real estate investing has taught me (first 19 spent figuring out answer to your question) that decisions like the one you're deciding to make have to be made based on a big picture, overall real estate strategy, i.e. buy and hold, buy and sell, etc.
I floundered and didn't accomplish much until I really had a long talk with myself and decided on a big picture, overall strategy. This incorporates many things including but certainly not limited to, your plans for the future, your plans for retirement, your belief in what is going to happen to values, rates, taxes, etc., and your belief as to what you want your role in your investments to be, just to name a few.
Although the other considerations mentioned by you and others are important, I "saw the light" and truly believe that with a big picture, overall plan in your mind (which could certainly be changed from time to time) you will hopefully accomplish as much as I have in the past 16 years, since my "awakening."
Hope that helps,
Joffrey
Was this suppose to help me make a decision or fight with myself somemore. : )
Hi Ben Hughes,
You're in a great metro area with good future job growth. Given that you have good cash flow and in a likely appreciating market, I probably would hang on to it. I don't see an compelling reason to sell such a deal.
You're making a some big assumptions about appreciation and future property values, so what you may want to focus on instead, is acquiring one or two more cash-flow positive properties and build up your portfolio. If your in appreciating markets then they will all increase in value for you. If not, you still have the cash flow. You also don't want to "chase" appreciated properties in the future from the expected gains on your Katy property.
My 2 cents.
Continued success!
$400 a month is good cashflow. Is there anyway to keep the property and gain more with your current income? How will it be paid off in 3-5 years? Are you paying extra on the mortgage? I do not understand how you do not know when it will be paid off? What is the mortgage rate? I ask because if you have a low rate and are paying extra on the mortgage you are wasting valuable market conditions right now. Instead you could utilize the extra by investing that in something else until you build enough for another property purchase. With interest rates where they are it costs literally nothing so I wouldn't be in a big hurry to pay it off at the expense of gaining a new property.
If you were to sale and profit 40k, how would that affect your taxes adding that to your income?