Rental property - sell or hold?

Question

I bought my 1st rental property in back 2018 for 180k. As we all know, the market is HOT and I'm wondering if I should sell or hold? The medium home value in my area is $400k. Would you sell, and why? Or if not why?

Basit Siddiqi · Answer

@Carlos LopezIf you feel like the value of the property can increase from now, hold onto it.If you feel like the value of the property will decrease, you may want to consider selling it. If you sell the property be mindful that there are actual costs to sell since the asset is not liquid. The value that you think it will decrease by needs to be more than the selling costs for the sale to make sense.

Benjamin Aaker · Answer

Depends on what you will be doing with that money. If you are wanting to continue renting in the same class, you'll be paying inflated rates and won't see any gain.

Also, if you have a renter in the place right now, you may have to move them out and I hate to do that to a good tenant.

Bill B. · Answer

If you’re done investing in real estate you should sell as you probably wont see lower prices in your lifetime. Certainly not low enough to make up for the 20% effective tax and 8% selling costs you’re going to incur. You’re looking at $30k in closing costs/commissions and then $30k in capital gains tax, and then some depreciation recapture. So you’d need a $60k/15% price drop just to be even. (Not counting the missed rent, so really you still lose by selling.)

It’s not for everyone or everyone would be doing it.