Should I sell or keep my rental property?

Question

Here are the vitals:

600k purchase with 20% down

Low maintenance and tax abated for another 15 years (which made it look as a good investment)

Rented out, Cash flow of $82/mo

BUT

The board has imposed a $400 special assessment for one year, then extended for another year, and now want to extend that fir another year (they want to build reserve funds as maintenance too low). So for the last two years, cashflow was -$300

Alternative to this (which board is considering) would be to raise maintenance by $200 extra, which will confirm negative cashflow of -$100

What would you do:

Sell ASAP even not seller’s market- just focus on breaking even (i would then put all money in stock market waiting for another investment opportunity)

Sell, but wait until market gets better (could be 1-3 years, maybe more). I don’t need the money right now so could be an option.

Keep, as there is potential for appreciation (upcoming neighborhood). Suck up the negative cashflow (-$100 isnt too bad).

Thanks for your advice

Basit Siddiqi · Answer

@Hwa LeeUnless you are an investor who looks for appreciation and has a feeling this will appreciate, I would move on from this property.$82 a month cash for for a $600,000 property is badit is a condo so you are at the mercy of the board.imo, you move on

Joe Villeneuve · Answer

Except the "money you left there" was going backwards the longer you "left it there".  Whether you needed the money or not, you were still losing it...not keeping it for a later "rainy day".  This meant that you would have less money to invest "down the road" when you decided to do REI.

Hwa Lee · Answer

@Joe Villeneuve exactly. That’s why when it became one, i wasn’t happy with the numbers I was getting, but didn’t really need the money right away so left if there. Thought at least I could get a good lesson out of it, if I wanted to pursue REI down the road. It did in a certain way, so no regret.

Joe Villeneuve · Answer

Your own home isn't an investment anyway

Hwa Lee · Answer

@Joe Villeneuve thanks for this perspective. I am in a learning process. I initially purchased this home as primary residence for myself but then life happened (got unexpectedly married and two kids). Guess there is no more reason to hold onto it, it gave me enough investment lessons. Thanks again!

Joe Villeneuve · Answer

Sell it and move on.  The 2nd mistake you made was assuming 82/month in cash flow was somehow a good thing.  I guess it wasn't.  You'll never recover your loses in this property...but you can if you take whatever cash you can get out of it (see:  SALE), and move it into the next deal that has better (actual) cash flow.

You probably wondered why I started with the 2nd mistake.  I saved the best for last.

The 1st mistake you made was thinking the property was your asset...it isn't.  Your cash is the asset.  The property is just a temporary resting place for it until it makes friends and you can move it forward (with its new friends) to make more friends...exponentially.

Hwa Lee · Answer

Another option is: Refi with better rate and shorter loan term, pouring my own money to build equity. Its a condo apt that i’ve had for 4 years now, my current loan is 10/1 ARM at 3.375%.