Everyone is telling me to sell when I think I should hold

[Adam Klugh]

I am finishing up a flip in Jackson MI that will produce a nice return. My total cost of both purchase and renovation is 125k. A friend of mine who is a real estate agent in the area for 20+ years told me he thinks it will sell TOMORROW if I list it for 195k.

My apprehension about selling right now is that the Jackson market has just begun to pick up. Jackson, MI prices tend to lag behind most other urban cities and recently homes have been flying off the market at higher and higher prices. My thought is that If I rent the place for a year, I could sell for a lot more next spring/summer. Not to mention, that I don't want to pay short term capital gains taxes on that money if I sell this year. 

On the flip side (pun intended), I have a great team in place and another deal under contract. My initial plan was to use hard money lending for the first time to finance the renovation but after exploring all the fees that the lender charges I'm considering selling the place I just renovated to pay for this next one I have under contract.

So what do I do, give my money to the government in taxes or to the hard money lender in fees?

Here's the Zillow listing of the property... just because I'm so proud of the work of my team

http://www.zillow.com/homes/315-s-Wisner-jackson-mi_rb/ 

[Bill Devola]

You're going to have a hard time soliciting quality answers on your situation because, although you've given a nice broad outline, there are many other details that should influence your decision.

1.  How hard is it to rent out and manage your would be flip?

2.  Is the rental break even cash flow, or better? 

3.  How much in taxes will save by getting out of short term cap gains status?

4.  How much are you going to pay in interest on your next flip (I usually calculate 10% of repairs+renovations for cost of hard money.  Ballpark figure.)?

You could break all these numbers out and do a true apples to apples, but you'll never be able to quantify how much you think the property will increase in value over the year you hold it, or the trouble it is for you to manage the rental.  

Many times when you do these numbers, its a crapshoot either way, and your decision is going to be based on your gut.  No clear cut right or wrong.  Thats not to say 2 years from now there won't be a decision that clearly would have been better than the other.   But hindsight, as they say, is 20/20.