Bad to keep just one rental?

Question

I currently own one rental. I buy through turnkey providers, so I am looking at properties listed above market price. Prices have risen so now the cash-flow with these properties aren't that great anymore (if there are any).  I want to scale so that if this property goes down, I can have the others pick up the slack. At the same time, I don't want to be picking up properties that don't cash flow.

My rental is a very old home (built in 1910), and I am expecting to see problems. I have funds ready to invest, but am considering putting them in REITs or syndications instead. Should I be looking to offload this rental I own, or continue to hold on?

BTW, I get financing on my properties, which is why it's hard for me to find cash-flowing rentals.

James Wise · Answer

You should note that a quick sale of a financed property is going to cost you. You have the majority of your interest packed into the 1st 7 years of your mortgage along with about 3% of the purchase price in purchasing costs & another 10% in selling costs. That's a lot to recoup. If the home isn't costing you my suggestion would be to ride it while you hit that principle pay down.

Ali Boone · Answer

Where are you looking and not finding cash flow properties? I work with turnkeys excessively and there's lots of cash flow to be had on them, even with where we are in the market.

Larry Fried · Answer

Account Closed Where are looking at buying turnkey properties.  It is getting harder to buy in good areas from reliable & trustworthy providers truly cash flowing turnkey properties, but still possible.  You just have to just work a little harder to find these deals and accept lower returns than even 2 years ago.

Benjamin Birnbaum · Answer

If your current property kicks off decent cash flow, and is in an area that you expect will realize hpa over time, then keep it.  If you do decide to sell, keep in mind that buyers will likely adjust their price to account for the age of the house and any issues that come up during inspection due to that age.  And if current deals in the market do not cash flow well, AVOID THEM.  There are many ways to hedge against your current investment losing value, and having some cash saved up is one of the best.

Jeffrey Holst · Answer

There is nothing wrong with the idea if having a single rental as long as it cash flows including a cap ex budget but if you aren't certian or at least reasonably convinced that will continue you should either sell or set aside a chunk of cashflow to cover unexpected expenses.  Also there definitely still are investments that can be made that cash flow but they are harder to find. One of two things (or both) will happen next rents will go up and correct market returns or prices will go down to correct market rates.  Particularly with rising interest rates.

If you know a good syndication I'd say it could be a good plan if you truly want to stay hands off. On the other hand it is possible to buy and hire management companies with out going turn key route.  Remember that the turn key guys need to eat to so they lower your margin by acting as a middle man.

Bad to keep just one rental?

Most Popular Reply