Advice on selling a cash flowing rental property

[Nathaniel Tant]

Hello Everyone,

I currently own three homes, two rentals and a primary residence that has a guest house in the back, which I also rent out. The wife is worried that we are over leveraged and sought help from a financial advisor. The advisor advised us to sell the rental with the highest interest rate because it wasn't worth keeping, even though it's cash flowing. Given the information below, would you sell Property Two? I'm finding it difficult to sell it because it's cash flowing. Looking for some advice from real world warriors out there!

Rental one: 
Mortgage is $560.00 and we owe $85,000.000 on it.
Interest is %3.5 and is currently worth %205,000.00

Rental two:
Mortgage is $950.00 and we owe $83,000.00 on it. Cash flow is around $400.00/month. 
Interest is 8% and is currently worth $140,000.00

Main residence:
Mortgage is $2800.00 and we owe $360,000.000 on it. We rent the guest house for 2k a month.
Interest is 6.7% and is currently worth $435,000.00

Student loans equal $190,000.00, gotta love the medical field.

We have no credit card debt and one car note that'll be paid in a couple of years. 

[Michael Fraulo]

Here’s how I’d think about it:

Rental Two:
Yes, 8% is steep, but you're still cash flowing $400/month. That means it’s covering the mortgage and putting money in your pocket. Selling it would give you a decent chunk of equity ($57K before closing costs), but then what? Paying off a portion of student loans or reducing debt is smart, but are you giving up a good long-term asset to do it?

Main Residence:
Renting the guest house for $2K on a $2,800 mortgage makes this a smart house hack. You’re essentially living for $800/month. That’s a win.

The Bigger Picture:
Your portfolio is performing. You're leveraged (68% LTV across the portfolio), but not irresponsibly. If cash flow is positive and you're not relying on credit cards to survive, you're managing it. Student loans are a big number, but if you're in the medical field, income potential over time can offset that.

My 2 cents:
I’d only sell Rental Two if you need the equity to ease cash flow stress, or you can immediately reinvest it into something with a better return or lower risk.

Otherwise, I’d hold. Between your $800 housing payment and the cash flow from both rentals, you basically live in your house for free. I would focus on using your income to pay down student loans, since there is no asset on the other side of that liability.