Should I hold or sell and reinvest?

Question

Hello everyone, just had a quick question that I was hoping someone may be able to help me with. I currently own a house in California. I started renting it out in August because my family and I will be moving to Hawaii next summer and I'm on deployment at the moment.

I have at minimum $30,000 in equity and at most $50,000. With that amount, is it smarter for us to continue to rent the property out or sell it and use that money to reinvest in my hometown market of Ohio/Kentucky.

I feel like I could invest that money into a multi-unit or even partner with someone for a bigger project that would bring in more cash flow.

Is that amount of money enough to pull the trigger or should I sit on the house a little while longer and reapproach the idea little later down the line. Thank you for any assistance you could provide.

Ryan O'Leary · Answer

@Nick Bauer

Hey man, if you haven’t used your VA loan yet, you could snag a SFH in Hawaii and house hack it. I’ve been doing it the last 2.5 years and through a deployment. I will probably rent it for one or two more PCS cycles before I sell it. Rates are crazy low for the VA. Just watch out for pricey HOA fees out here... it’s the only thing holding me back from keeping this property in order to break even with rental income. I’ll have made about $60k extra rental income on top of what we already get via BAH.

Stay safe brotha.

- Ryan

Jon Kelly · Answer

@Nick Bauer Can you refinance and pull cash out? Then, you keep the property and have additional cash to invest

Aubrey Maldonado · Answer

@Nick Bauer My husband and I went through the same debate earlier this year and decided to sell. I still have mixed feelings about it; but, overall, I feel confident in the decision because it freed up cash we could use. We bought the property before we knew how to evaluate all the costs associated with holding a property month-to-month. In our case, it made sense to sell because it wouldn't cashflow nor appreciate well enough to offset the costs.

On the other hand, if you're cash flowing pretty well with a tenant already in the property, I'd be tempted to keep it. Especially because it's much harder to sell a tenant-occupied house. Juggling showings with your tenant's schedule can be bothersome on all sides. But I'm not saying it can't be done. Some tenants are more flexible than others.

Theresa Harris · Answer

Remember if you sell it you have costs associated with selling and that will cut into your equity.  Figure out how much you'd have left after realtor's fees and if there are any costs with the mortgage.

Chris Bounds · Answer

If you're confident your opportunity cost is better (higher margins, better cash flow, lower risk, etc) then go for it.

What would stop you from keeping it AND still doing other deals

Raising $30-50k from private lenders isn't difficult