Should I sell property or keep as a rental?

Question

Hello,

I have a property that I inherited and fixed up myself. Its worth 300K and the loan amount is $110,000 which would leave about 150K in my pocket if sold. If sold, I plan to use the money to do multiple BRRR's and flips. I'm only cash flowing about $300 a month on this property. What would be a wise decision here?

Weston O'Dell · Answer

Hey Alex, looks like you are in a great position overall! Really it comes down to where you want to be long term. If your goal is to scale a rental portfolio then I'd say sell the property and start to BRRRR. You could consider a refinance or pulling a HELOC on the property although this would most likely eat up the $300/mos cash flow you have when moving leverage up. I'm all for holding on to assets but having strong liquidity during the BRRRR process really can help make things less stressful. If you were to use fix & flip funding when acquiring future deals, you'll be able to keep a healthy amount of cash in your pocket and do multiple deals at a time. Best of luck and let us know which route you choose to go!

Jim Rivell · Answer

I think there is a lot more things to consider here prior to making the decision. Does the property fit into the architecture of the portfolio you want? Are you going to be self-managing? In relation to the above, is it close to where you live or far? Are you concerned regarding the tax burden of selling?

Based on cash flow and equity here you have flexibility to do whatever you'd like which is a great problem to have. If the plan is to use the proceeds to flip/BRRRR you can even consider a HELOC or refi to get some capital to use but also keep the property. Just food for thought.

Benjamin Aaker · Answer

Alex, getting $300 a month in cash flow is really good. It's paying down the mortgage and giving you cash in the pocket. You should save that 300 each month for a down payment on the next property. You could even get a line of credit on the current property and use it to purchase the next one. Great work fixing that place up. It's like the apple tree that's now bearing fruit. Don't cut it down.

Billy Smith · Answer

I would sell if in C to D class  areas ,if in A to B areas look at renting after doing your home work .

Should I sell property or keep as a rental?

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