Should I sell my house or rent it out?
Member since 2018 · 26 posts · 19 votes
Should I sell my house or rent it out?
Most Popular Reply
Investor · San Diego, CA · Member since 2016 · 1k+ posts · 975 votes
3y@Michael Cai STR would definitely be a way to get a better return on your equity, but you might not be able to STR there depending on your local laws. Where is the property?
If you're accredited, there are many options to get a 10% return, but you MUST vet the sponsor thoroughly. The quality and integrity of the team are more important than the return numbers advertised on a particular idea.
Good luck and let us know what you decide so others can learn from your journey!
56 Replies
- Member since 2018 · 26 posts · 19 votes3y
Quote from @Sunny D.:
Don't sell.Quote from @Michael Cai:
Quote from @Corby Goade:
There's no question here- keep it 100%. It will be cash flow positive, you have an interest rate that is a quarter of inflation- you'll never see rates like that again. You can depreciate it, you can leverage your equity and scale your portfolio.
Think of it this way- almost any investor looking at deals today- if they saw the numbers you ALREADY have on this house, that would be a grand slam deal.
Finally- you don't get free by selling your assets, you get free by keeping them, Don't lose sight of the prize and take the quick payoff VS the life changing, slow burn.
Best of luck!
I know, it's a shame to let this one go.. but are you saying I hold this long term? in which case I will have to pay taxes if I sell it after renting it out for more than three years.. Does the number still work if I hold it for 10+ years? 2100 mortgage is a 15 year mortgage so will be paid off in 13 years if I leave it a rental.. If I have to sell it within three years, then it almost don't make a lot of difference if I sell it now or in 2-3 years.
Always asset Quality vs. Quantity for long term wealth. Listen to people whose net worth is more than yours. 90pct of the cash flow crowd make less money in real estate than someone who has a class A property and gets increased cash flow as rents go up and gets appreciation as well over time.
You have couple of years to decide on selling to get primary owner tax free capital gains. Now is a bad time to sell as buyers are burdened by high interest rate. You know the area, self manage, find a qualified tenant with good income and credit history who can sign a 2 year lease.
You are right, probably rent for 2 years and sell is the best approach, I will kick myself if it goes up another 50-100k in two years and I sell it now.. Always good to listen to people who have higher net worth :)
- Investor · Wheat Ridge, CO · Member since 2013 · 75 posts · 41 votes3y
I'm in a similar situation - I have a primary home with sub 3% interest and around $125K equity. But I'm leaning towards selling because after accounting for all true expenses (vacancy, utilities during vacancy, management fee and commissions, repairs, and saving for repairs) there's very little (under $50 a month) or no cash flow at all. One thing I've learned even more in the last year is that the 50%+ rule in alive and well in SFH investing.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Neil Cronkrite:
I'm in a similar situation - I have a primary home with sub 3% interest and around $125K equity. But I'm leaning towards selling because after accounting for all true expenses (vacancy, utilities during vacancy, management fee and commissions, repairs, and saving for repairs) there's very little (under $50 a month) or no cash flow at all. One thing I've learned even more in the last year is that the 50%+ rule in alive and well in SFH investing.
yeah, if we do sell and buy immediately (like I just did) I basically exchange an 40% LTV primary to 80%LTV primary.
But here's the deal, if we exchange at the same time we don't really lose anything as it exchanges when cost and transaction time is the same means the appreciation rate is the same. (City A would appreciate X% with city B appreciate 0.98 of X%).
in my case I made 500k, then I re-invested the cash for $100k in the new home. Old rate sub 3% and new rate is high 4% seems I dont make a right decision BUT, here's the big but.
in the new home I could rent out the basement and the ADU ; when these two places being rented out , I'm cash flowing in my own primary house!
and second , because I do BRRR also, even if I sell in three years, It's guaranteed I made profit from appraisal refinancing alone.So there're LOT of more factor and consideration. Now I have literaly one house with two rentable place (ADU and basement) and fresh $400k.
Things like this could only be made after very thorough investigation of our local market.So interest rate alone is not the single factor, but what you do **after** you have the money, is even more important than ever.
What's quite amazing is I could oversell my previous primary , and underbid the new home.This is why I advice to other investor to investigate the niche in your local market, don't just blindly find cashflowing property in Ohio LOL
- Member since 2018 · 26 posts · 19 votes3yI did my calculation, if I keep it long term - I mean really long term, suppose the property goes up to 840k in 13 years, not unreasonable, by that time my 15 tear mortgage is paid off..so I will have 850 minus 500k gain * 15% long term tax = $75k, so I after tax will have 775k, compare to sell it now and net 380 or 390k. Nothing else will make me an extra 380k after tax in 13 years, all while still cash flowing on that property, so you are completely correct that to build wealth I can hold it for a really long time and no worry about paying tax on the gain. Plus I already have a HELOC of 250k on that house, so holding long term is an option.. but if I sell it in 4 ,5 years then it's not worth having to pay tax
Quote from @Corby Goade:
@Michael Cai Absolutely- you can still access most of that equity tax free if you keep it, and I assume you haven't had a buy and hold rental before? If not, you haven't even begun to experience the tax benefits and they only get better over time.
Yes- keep it, and if you want to scale, get a HELOC before you move out and begin your journey. Don't miss the forest for the trees- there are thousands of people here who are kicking themselves for selling their primaries and flips without really considering finding a way to keep them.
If I need the money then sell it in 2 years. Unfortunately I may need the money, I'm supporting wife and two kids :), either way I will rent it for two years and see what my situation is at that time and decide.. - 3yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Quote from @Michael Cai:
I'm moving out of state and trying to decide if I should sell or rent my current home.., my current house built in 1996 is worth about 630k, mortgage balance is 210k on it. monthly payment is 2100 including tax and insurance. market rent is about 3000k. I have low mortgage interest rate on it is 2.6%. House price has potential of going up more.. (bought in 2015 for 340k)
If I keep the house, I can get 3000-2100 = 900/mo (300 less if I use a management company), also over $1000 of the rent each month goes towards principle.
If I sell the house, I can net a little less than 400k, but what can I invest that into that has better return? Airbnb? Crowdfunding Real estate? buy another rental free and clear?
What would be a wise decision?
Have you tried to get a HELOC on it?
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Michael Cai:
I did my calculation, if I keep it long term - I mean really long term, suppose the property goes up to 840k in 13 years, not unreasonable, by that time my 15 tear mortgage is paid off..so I will have 850 minus 500k gain * 15% long term tax = $75k, so I after tax will have 775k, compare to sell it now and net 380 or 390k. Nothing else will make me an extra 380k after tax in 13 years, all while still cash flowing on that property, so you are completely correct that to build wealth I can hold it for a really long time and no worry about paying tax on the gain. Plus I already have a HELOC of 250k on that house, so holding long term is an option.. but if I sell it in 4 ,5 years then it's not worth having to pay taxQuote from @Corby Goade:
@Michael Cai Absolutely- you can still access most of that equity tax free if you keep it, and I assume you haven't had a buy and hold rental before? If not, you haven't even begun to experience the tax benefits and they only get better over time.
Yes- keep it, and if you want to scale, get a HELOC before you move out and begin your journey. Don't miss the forest for the trees- there are thousands of people here who are kicking themselves for selling their primaries and flips without really considering finding a way to keep them.
If I need the money then sell it in 2 years. Unfortunately I may need the money, I'm supporting wife and two kids :), either way I will rent it for two years and see what my situation is at that time and decide..give me the zip code + home configuration .... and I would predict the home value in 5 years ... usually my calculation is dead accurate better than Zillow estimate LOL :)
Quote from @Michael Cai:
I did my calculation, if I keep it long term - I mean really long term, suppose the property goes up to 840k in 13 years, not unreasonable, by that time my 15 tear mortgage is paid off..so I will have 850 minus 500k gain * 15% long term tax = $75k, so I after tax will have 775k, compare to sell it now and net 380 or 390k. Nothing else will make me an extra 380k after tax in 13 years, all while still cash flowing on that property, so you are completely correct that to build wealth I can hold it for a really long time and no worry about paying tax on the gain. Plus I already have a HELOC of 250k on that house, so holding long term is an option.. but if I sell it in 4 ,5 years then it's not worth having to pay taxQuote from @Corby Goade:
@Michael Cai Absolutely- you can still access most of that equity tax free if you keep it, and I assume you haven't had a buy and hold rental before? If not, you haven't even begun to experience the tax benefits and they only get better over time.
Yes- keep it, and if you want to scale, get a HELOC before you move out and begin your journey. Don't miss the forest for the trees- there are thousands of people here who are kicking themselves for selling their primaries and flips without really considering finding a way to keep them.
If I need the money then sell it in 2 years. Unfortunately I may need the money, I'm supporting wife and two kids :), either way I will rent it for two years and see what my situation is at that time and decide..My first CA rebtal home in Folsom, I bought it for 255k in 2012. I rented for 1750$ and broke even on cashflow. I took a 15 year mortgage, refinanced at 2.25 pct and only have 40k left on the original 205k loan. I paid off a few 100$ a month once in a while . Property is worth 700k and rents now for 2850$ with 1000$ cash flow. In 2 years I will own it clear. I don't plan to refinance, the cash flow of 3000$ is what I seek. There is no need to keep chasing volume in assets, I have 2 other sfh in folsom that will be paid off in 10 years. Cashflow is not king, debt free with high quality growth assets is the king.
- Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes3y
Quote from @Michael Cai:
I'm moving out of state and trying to decide if I should sell or rent my current home.., my current house built in 1996 is worth about 630k, mortgage balance is 210k on it. monthly payment is 2100 including tax and insurance. market rent is about 3000k. I have low mortgage interest rate on it is 2.6%. House price has potential of going up more.. (bought in 2015 for 340k)
If I keep the house, I can get 3000-2100 = 900/mo (300 less if I use a management company), also over $1000 of the rent each month goes towards principle.
If I sell the house, I can net a little less than 400k, but what can I invest that into that has better return? Airbnb? Crowdfunding Real estate? buy another rental free and clear?
What would be a wise decision?
My first reaction to your post is when considering inflation and the cost of money, how many months will you have to hold the home with a profit of $900 cash flow per month to generate $400K of profit if you sold the home now? When one considers the time value of $ I'm not sure I would hold on to it. Even with the capital gains tax. But with that said here are some options to consider:
1. Rent the home out for a couple of years so it becomes a legit business asset on your tax returns; Then when you sell it; purchase a similar asset and use 1031 exchange to delay the taxes. This would support your idea of buying another rental free and clear but also avoiding/delaying taxes from the sale of your first rental2. Evaluate whether or not you can have your cake and eat it to. Evaluate if it's possible to pull out enough equity in the property through a refinance; cash flow the current asset and then reinvest the difference in another rental. I know the answer to this is most likely no because of your current 2.6% interest rate but I'd run the analysis anyway.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Sunny D.:
Quote from @Michael Cai:
My first CA rebtal home in Folsom, I bought it for 255k in 2012. I rented for 1750$ and broke even on cashflow. I took a 15 year mortgage, refinanced at 2.25 pct and only have 40k left on the original 205k loan. I paid off a few 100$ a month once in a while . Property is worth 700k and rents now for 2850$ with 1000$ cash flow. In 2 years I will own it clear. I don't plan to refinance, the cash flow of 3000$ is what I seek. There is no need to keep chasing volume in assets, I have 2 other sfh in folsom that will be paid off in 10 years. Cashflow is not king, debt free with high quality growth assets is the king.
Wow that's cool, 255k to 700k is way above typical bay area appreciation :-)
I sold from high 400k to a mil in pleasanton as well.If in 2012 I invest in Ohio or Indiana for cash flow that $10k only grow to $50k perhaps LOL
I guess everyone that purchase between 2009-2014 is the investor that able to catching up the super bull run mode in bay area in the past 30 years.
- Member since 2018 · 26 posts · 19 votes3yAre you saying I should keep holding this property and not selling it?
Quote from @Sunny D.:
Quote from @Michael Cai:
I did my calculation, if I keep it long term - I mean really long term, suppose the property goes up to 840k in 13 years, not unreasonable, by that time my 15 tear mortgage is paid off..so I will have 850 minus 500k gain * 15% long term tax = $75k, so I after tax will have 775k, compare to sell it now and net 380 or 390k. Nothing else will make me an extra 380k after tax in 13 years, all while still cash flowing on that property, so you are completely correct that to build wealth I can hold it for a really long time and no worry about paying tax on the gain. Plus I already have a HELOC of 250k on that house, so holding long term is an option.. but if I sell it in 4 ,5 years then it's not worth having to pay taxQuote from @Corby Goade:
@Michael Cai Absolutely- you can still access most of that equity tax free if you keep it, and I assume you haven't had a buy and hold rental before? If not, you haven't even begun to experience the tax benefits and they only get better over time.
Yes- keep it, and if you want to scale, get a HELOC before you move out and begin your journey. Don't miss the forest for the trees- there are thousands of people here who are kicking themselves for selling their primaries and flips without really considering finding a way to keep them.
If I need the money then sell it in 2 years. Unfortunately I may need the money, I'm supporting wife and two kids :), either way I will rent it for two years and see what my situation is at that time and decide..My first CA rebtal home in Folsom, I bought it for 255k in 2012. I rented for 1750$ and broke even on cashflow. I took a 15 year mortgage, refinanced at 2.25 pct and only have 40k left on the original 205k loan. I paid off a few 100$ a month once in a while . Property is worth 700k and rents now for 2850$ with 1000$ cash flow. In 2 years I will own it clear. I don't plan to refinance, the cash flow of 3000$ is what I seek. There is no need to keep chasing volume in assets, I have 2 other sfh in folsom that will be paid off in 10 years. Cashflow is not king, debt free with high quality growth assets is the king.
- 3yTom DegroodtPro MemberEvans, GA · Member since 2016 · 122 posts · 65 votes
I was in close to the same boat, and choose to stay pat and keep the house.
I see your numbers different . Bought house for $340K, could sell for $630K. That would leave you with a capitol gain of $630-340 = 290K. If you have done any improvements/repairs to the house since purchase, they also come off the capitol gains side. I.E. 10K for a new deck, new HVAC, HWH, windows...
Cap Gains will likely be much less B/c 6% commission on the way out. So the $630 becomes $592.2K, so Capitol gains would only be on $252.2K @ 25% your tax bill would be $63K. That is if you hold it for another 36 months. Holding for another 36 months will get you Call it $600 in cashflow + another $1,000 a month = $1,600 * 36 = $57,000 in loan paydown and cashflow. That is close enough to call it a break even.
If you take the money now you will need to figure out what to buy and your interest rate will suck. Whatever appreciation happens will likely be the same between old and new investment.
I would think about taking a 100K HELOC against the house. That will make you less cash poor. Rent the house and if you find something in the new state you will have 100K for down payment or purchase outright. The HELOC $$$ can stay so you are not paying interest unless you need it. The one I got, they forced me to take 5K of it out and keep it for 12 months, so they could waive the closing costs...
Then in 2 years you will have $38,000 in cashflow and paydown. Sell the house then, or revisit the Capitol Gains question.
We are hoping to sell ours with owner financing, wrapping the underlying mortgage in 2 years. That way we will get the benefit of not paying capitol gains tax and picking up the spread from the low interest mortgage and a higher market mortgage rate as well as market rate for our equity position
- 3yBonnie LowPro MemberLender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
With that great interest rate and that much equity I think I'd lean towards putting a HELOC on it and using some of the cash to fund your next investment.
- Realtor · Columbus Ohio, Cleveland Ohio · Member since 2022 · 849 posts · 830 votes3y
Id rent at least till its paid off, why not have someone else pay off the rest of the mortgage? You could also look into a heloc as Remington said!
- Yes if it's a class A asset which will have a good balance of rent growth and appreciation , given you have a sweet mortgage. Anything you buy for next 2 years, expect 6 pct min interest
Quote from @Michael Cai:
Are you saying I should keep holding this property and not selling it?Quote from @Sunny D.:
Quote from @Michael Cai:
I did my calculation, if I keep it long term - I mean really long term, suppose the property goes up to 840k in 13 years, not unreasonable, by that time my 15 tear mortgage is paid off..so I will have 850 minus 500k gain * 15% long term tax = $75k, so I after tax will have 775k, compare to sell it now and net 380 or 390k. Nothing else will make me an extra 380k after tax in 13 years, all while still cash flowing on that property, so you are completely correct that to build wealth I can hold it for a really long time and no worry about paying tax on the gain. Plus I already have a HELOC of 250k on that house, so holding long term is an option.. but if I sell it in 4 ,5 years then it's not worth having to pay taxQuote from @Corby Goade:
@Michael Cai Absolutely- you can still access most of that equity tax free if you keep it, and I assume you haven't had a buy and hold rental before? If not, you haven't even begun to experience the tax benefits and they only get better over time.
Yes- keep it, and if you want to scale, get a HELOC before you move out and begin your journey. Don't miss the forest for the trees- there are thousands of people here who are kicking themselves for selling their primaries and flips without really considering finding a way to keep them.
If I need the money then sell it in 2 years. Unfortunately I may need the money, I'm supporting wife and two kids :), either way I will rent it for two years and see what my situation is at that time and decide..My first CA rebtal home in Folsom, I bought it for 255k in 2012. I rented for 1750$ and broke even on cashflow. I took a 15 year mortgage, refinanced at 2.25 pct and only have 40k left on the original 205k loan. I paid off a few 100$ a month once in a while . Property is worth 700k and rents now for 2850$ with 1000$ cash flow. In 2 years I will own it clear. I don't plan to refinance, the cash flow of 3000$ is what I seek. There is no need to keep chasing volume in assets, I have 2 other sfh in folsom that will be paid off in 10 years. Cashflow is not king, debt free with high quality growth assets is the king.
Eventually in 10 years you can 1031 to a high end investment asset if you are bored ;)
This is coming from someone who tried too many things in last decade (mostly in last 6 years)
- bought 7 sfh or duplex in Cleveland west side (sold 4 for nice profit , 3 left)
I won't buy there anymore, tenant class not appealing for me
- 2 flips in Cleveland, marginal profit
- 1 sfh in Birmingham, will get rid of it someday
- 3 out of state flips in Chicago ( lost net 60k on all)
- 5 bay area flips with a partner ( my net profit maybe close to 300k)
- close to a million in multiple real estate syndication deals
- 3 sfh in folsom
At this point, i will be happy to own 5 sfh in class a areas debt free and rest go for passive deals.
$10k/year return on $400k equity is absolutely terrible. If you find a multi-family with 10% cash-on-cash return, thats $40k/year. Or you can get a 2 year bank CD with 5% guaranteed return. You sell right now you don't pay taxes on the gain. Thats $75k savings right there. And today houses are still fetching near-covid pricing despite soaring rates. Selling is an absolute no-brainer to me, and I am surprised by some of these responses. Losing the low interest rate is the only drawback, but I think the tax-free gain more than makes up for that.
- Member since 2018 · 26 posts · 19 votes3y
Quote from @Sunny D.:
Yes if it's a class A asset which will have a good balance of rent growth and appreciation , given you have a sweet mortgage. Anything you buy for next 2 years, expect 6 pct min interestQuote from @Michael Cai:
Are you saying I should keep holding this property and not selling it?Quote from @Sunny D.:
Quote from @Michael Cai:
I did my calculation, if I keep it long term - I mean really long term, suppose the property goes up to 840k in 13 years, not unreasonable, by that time my 15 tear mortgage is paid off..so I will have 850 minus 500k gain * 15% long term tax = $75k, so I after tax will have 775k, compare to sell it now and net 380 or 390k. Nothing else will make me an extra 380k after tax in 13 years, all while still cash flowing on that property, so you are completely correct that to build wealth I can hold it for a really long time and no worry about paying tax on the gain. Plus I already have a HELOC of 250k on that house, so holding long term is an option.. but if I sell it in 4 ,5 years then it's not worth having to pay taxQuote from @Corby Goade:
@Michael Cai Absolutely- you can still access most of that equity tax free if you keep it, and I assume you haven't had a buy and hold rental before? If not, you haven't even begun to experience the tax benefits and they only get better over time.
Yes- keep it, and if you want to scale, get a HELOC before you move out and begin your journey. Don't miss the forest for the trees- there are thousands of people here who are kicking themselves for selling their primaries and flips without really considering finding a way to keep them.
If I need the money then sell it in 2 years. Unfortunately I may need the money, I'm supporting wife and two kids :), either way I will rent it for two years and see what my situation is at that time and decide..My first CA rebtal home in Folsom, I bought it for 255k in 2012. I rented for 1750$ and broke even on cashflow. I took a 15 year mortgage, refinanced at 2.25 pct and only have 40k left on the original 205k loan. I paid off a few 100$ a month once in a while . Property is worth 700k and rents now for 2850$ with 1000$ cash flow. In 2 years I will own it clear. I don't plan to refinance, the cash flow of 3000$ is what I seek. There is no need to keep chasing volume in assets, I have 2 other sfh in folsom that will be paid off in 10 years. Cashflow is not king, debt free with high quality growth assets is the king.
Eventually in 10 years you can 1031 to a high end investment asset if you are bored ;)
This is coming from someone who tried too many things in last decade (mostly in last 6 years)
- bought 7 sfh or duplex in Cleveland west side (sold 4 for nice profit , 3 left)
I won't buy there anymore, tenant class not appealing for me
- 2 flips in Cleveland, marginal profit
- 1 sfh in Birmingham, will get rid of it someday
- 3 out of state flips in Chicago ( lost net 60k on all)
- 5 bay area flips with a partner ( my net profit maybe close to 300k)
- close to a million in multiple real estate syndication deals
- 3 sfh in folsom
At this point, i will be happy to own 5 sfh in class a areas debt free and rest go for passive deals.
That's amazing how many different things you tried :) Especially they are all over the place, must be challenging to manage different properties in different states..
- Member since 2018 · 26 posts · 19 votes3y
Quote from @Tim P.:
$10k/year return on $400k equity is absolutely terrible. If you find a multi-family with 10% cash-on-cash return, thats $40k/year. Or you can get a 2 year bank CD with 5% guaranteed return. You sell right now you don't pay taxes on the gain. Thats $75k savings right there. And today houses are still fetching near-covid pricing despite soaring rates. Selling is an absolute no-brainer to me, and I am surprised by some of these responses. Losing the low interest rate is the only drawback, but I think the tax-free gain more than makes up for that.
i don't think it's easy to get a multi-family unit that pays 10% cash on cash. If I need to finance the interest rate is 6%+, if I use a management company, that all eats into the profit.. Also it's a lot more headache to deal with multiple tenants. if I rent my house $1200/mo goes towards principle + 900/mo cash flow, that's 5% return already, not counting average 4.7% appreciation (national average since 2000) so that beats a CD with 5% return. I'm now convinced holding it really long term is good approach. :)
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Michael Cai:
Quote from @Sunny D.:
- bought 7 sfh or duplex in Cleveland west side (sold 4 for nice profit , 3 left)Quote from @Michael Cai:
Quote from @Sunny D.:
Quote from @Michael Cai:
I won't buy there anymore, tenant class not appealing for me
- 2 flips in Cleveland, marginal profit
- 1 sfh in Birmingham, will get rid of it someday
- 3 out of state flips in Chicago ( lost net 60k on all)
- 5 bay area flips with a partner ( my net profit maybe close to 300k)
- close to a million in multiple real estate syndication deals
- 3 sfh in folsom
At this point, i will be happy to own 5 sfh in class a areas debt free and rest go for passive deals.
That's amazing how many different things you tried :) Especially they are all over the place, must be challenging to manage different properties in different states..
Holy cow, your portfolio is very similar to me except I don't have anything in Ohio. Your chicago's seems similar to my own Wisconsin.
I did few times flip bay area too and those are the real wealth generator engine LOL - Investor · Tempe, AZ · Member since 2019 · 104 posts · 66 votes3yIf you can rent your property for $3 million, I would say that's definitely the way to go. ;-p
Quote from @Michael Cai:
market rent is about 3000k.
- Specialist · Charlotte, NC · Member since 2021 · 185 posts · 106 votes3y
I would sell and invest again, potentially where you decide to move. It makes the most sense from a financial stand point. Plus you won't have to deal with tenants which can be tricky when out of state. If you need my assistance in selling please let me know. I'm an investor and a investor friendly realtor. I am not sure where your located but I'm in North Carolina and handle the Charlotte metro area.
- Member since 2019 · 258 posts · 35 votes3y
@Amy Shutes
In a similar boat as OP .OO Triplex
PP $725k
loan amount $505k (27 yrs left )
PITI $3700
Rent From Two units $5000
Expected Sell Price 1 Mil
Need to relocate but confused on whether to sell or hold
Appreciate your inputs
- Specialist · Charlotte, NC · Member since 2021 · 185 posts · 106 votes3y
You have some great equity which is a very good thing. It will set you up for success on your next endeavor more locally. That is my recommendation from personal experience. I think the challenge could come when trying to manage out of state. I've seen homes that are rented and poorly run go downhill so bad that they have to sell to another investor at very discounted price. This was because the investor was out of state and never even had eyes on the properties. It can be done successfully if you have the right people in place. It's a little bit of a gamble though and why take the risk if you don't have to. I personally would feel much more comfortable managing my property somewhat close by. That is just me personally though and not to say that is the correct way. I would sell and take the equity to the next investment. If you need my assistance selling I'm happy to do it.
- Realtor · Charlotte, NC · Member since 2017 · 359 posts · 293 votes3y
@Michael Cai what is your goal with real estate? Are you wanting to build a portfolio of homes? Replace your W2 income? Get into real estate full time? Will you require money for a downpayment on a home wherever you move to with the family? Do you have 3-6 months worth of reserves (separate from your family's emergency fund) set aside to be able to float any expenses that come up? Because they will.
There's a lot of different options, and every investor can argue a different strategy until they're blue in the face. But you need to be clear on your end goal so that your decisions line up with that end goal. As well as lining up with your family's needs right now.
In my thoughts, it doesn't matter what your interest rate is. People have gotten so emotionally attached to their 2.5% interest rates. It was great while it lasted, but that's no reason to hold onto a property.
With your numbers....$2100 for PITI, $300 for PM, $150 for vacancy, $300 for cap ex and maintenance (some would recommend 10% each for Cap Ex and Maintenance) You'd actually be cash flowing about $50-$150/month (back of the napkin math).
With those numbers in mind, what best works for your family's needs and to reach your RE goals?
@Michael Cai- thanks ....20K of sales expenses seems low? also make sure to ask a CPA / accountant if there are any tax consequences if and when you sell ..... have you been a landlord in the past? if so - renting it might be OK .....if you want to either simplify your life and use the funds to enjoy or reinvest - I would consider selling and moving on ..really pesonal preference and no right or wrong answer here
- 3yAndreas MuellerBusiness MemberReal Estate Agent · Nashville, TN · Member since 2019 · 410 posts · 181 votes
As Warren Buffet Says: "Interest rates are like gravity, they affect everything." Especially Real Estate asset prices. Unless you need to sell I highly recommend you dont. Wait till interest rates go down and, in turn, prices will go up in tandem. Im saying this as a Realtor in Nashville. Highly don't recommend selling in this market unless you need to or have a sophisticated tax strategy you are following. Happy to chat off line!
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