Would you sell for $40k lump, or hold for $1k/month?

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Would you sell for $40k lump, or hold for $1k/month?

William C.
Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
I understand most answers will begin with "it depends" but for the sake of argument that's all the details I'll give. knowing what you know about holding a rental property and or flipping a house, what would you do if you could sell now for a $40k profit, or hold for $1000 net net a month in positive cash flow? And why?
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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
9y

Ill take the $1k a month. I dont typically like to sell unless Im making $100k

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  • Brian Faulkner
    Homeowner · Indianapolis, IN · Member since 2015 · 56 posts · 35 votes
    9y
    12k a year, that's a 30% return if I was investing he 40k elsewhere... tell us your plan for the 40k if you were to sell.
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  • Rocky V.
    Rental Property Investor · Arlington, TX · Member since 2012 · 788 posts · 640 votes
    9y

    Hold on to it unless you can see greater returns with that $40K else where.  I'm contemplating the same scenario but potential profit is $200K and net profit a month is $1K so kind of a no-brainer.

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  • Albert Ng
    Rental Property Investor · San Jose, CA · Member since 2015 · 401 posts · 221 votes
    9y
    If there's no issue with holding the property, I would be happy to put 40K down for 300/month cash flow.
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  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y
    William C. If I could turn $40K into $1K a month I'd do it all day long. You rarely will see a 30% annual return without huge risk.
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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    Did you simply pick the $1000/month out of the air.

    Difficult to answer the question without knowing the value of the property and amount invested. Can't answer the question without context.

    If I had $1000 positive cash flow per month with a property leveraged 100% I would hold it.

    If I needed the $40K to do my next deal I would sell.

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  • Kevin Hunter
    Rental Property Investor · Carlisle, PA · Member since 2013 · 1k+ posts · 543 votes
    9y
    Hold. In 3 years, 4 months you have the 40K. Easy day.
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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    9y

    Ill take the $1k a month. I dont typically like to sell unless Im making $100k

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    1Reply
  • Chinmay J.
    Investor · Northern, VA · Member since 2016 · 1k+ posts · 904 votes
    9y

    It Depends....

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  • Bob Derwin
    Investor · Mountaintop, PA · Member since 2013 · 110 posts · 57 votes
    9y

    If the home is in a good neighborhood  (A/B), I would hold and take the positive cash flow over time, as the home *should* appreciate in value.  Otherwise, I would take the quick 40K.

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  • Kyle McCorkel
    Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
    9y
    Hold! That's a 30% cash on cash return.
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  • William C.
    OP
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    9y
    Jus to clarify, we bought a triplex and renovated it, raised the rents and raised the value. If we were to sell we would net nearly $40k, if we hold we net $1000 a month after all expenses, and capex and management. I would reinvest the $40k, although I don't necessarily need it because we can refi and cash out basically using the BRRR strategy. So with all that said we can continue to do more deals like this no matter the route we take, it's a matter of lump sum profit or slow profit. Obviously other benefits come with holding, like principal pay down, and possible appreciating. as do other headaches and risk.
    0Reply
  • William C.
    OP
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    9y
    It's in an A- Neighborhood.
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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    I would refinance, mortgage to the hilt, 100% if possible  and hold on. Do not pay down the mortgage, keep refinancing for maximum return. If it appreciates pull it out.

    This is a cash cow that will keep giving as long as you are prepared to take. Do not allow your money to die a slow death as equity.

    How much of your own money is lying dead in the property now.

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  • William C.
    OP
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    9y
    Greg S. I like that approach, although I see rates rising from here on out, but just a hunch. Close to none after the refi. Plus the principal paydown will be slow after the loan resets. But I see your point.
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