Should I SELL or continue to RENT/MANAGE???

Member since 2018 · 17 posts · 1 vote

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments

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Matthew CrivelliBusiness Member

Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes

You have an asset paying you a low end salary on top of the asset appreciation still occurring . I'm sure you also have a great rate on the property too. That is a good place to be when most other asset classes are taking a nose dive. If it was me I think I would stay put unless the cash from the sale was absolutely necessary. @David Paez

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Kim Meredith HamptonBusiness Member
Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
4y
David, I think a lot depends of what your tax bracket is, do you have a kid starting college, some other major expense and/or do you have a larger asset that you want to invest in for a 1031 exchange? Lots of things to ponder before doing that.
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David Paez
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Member since 2018 · 17 posts · 1 vote
4y
Thank you for your response: no college-age son/daughter, no major expenses, and I know plans to do a 1031 exchange, it would allow me to be a bit more liquid for opportunities whenever they present themselves.
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Matthew CrivelliBusiness Member
Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
4y
You have an asset paying you a low end salary on top of the asset appreciation still occurring . I'm sure you also have a great rate on the property too. That is a good place to be when most other asset classes are taking a nose dive. If it was me I think I would stay put unless the cash from the sale was absolutely necessary. @David Paez
[email protected]413-348-8346
Freedom Capital Funding, LLC523 Reviews
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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments
How did you buy it? What was the DP and what was financed?
0 Reply
Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
4y
@David Paez From what you describe I would not sell it even if I needed the money and in that case I'd get an LOC. Why mess with a good thing. A couple more like that and you are set for life! I would not sell it even if my dog needed surgery!😂
2 Reply
David Paez
OP
Member since 2018 · 17 posts · 1 vote
4y
Quote from @Matthew Crivelli:

You have an asset paying you a low end salary on top of the asset appreciation still occurring . I'm sure you also have a great rate on the property too. That is a good place to be when most other asset classes are taking a nose dive. If it was me I think I would stay put unless the cash from the sale was absolutely necessary. @David Paez

That is right, but would the asset continue to appreciate? (under current and upcoming economic conditions) ??
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David Paez
OP
Member since 2018 · 17 posts · 1 vote
4y
Quote from @Joe Villeneuve:

Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments
How did you buy it? What was the DP and what was financed?

Sorry , I don't understand your question
0 Reply
Alex Talcott
Attorney · Durham, NH · Member since 2019 · 292 posts · 126 votes
4y
I'll consider buying it.
You're welcome to message me.
0 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Quote from @David Paez:

Quote from @Joe Villeneuve:

Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments
How did you buy it? What was the DP and what was financed?

Sorry , I don't understand your question
How did you buy it?
How much of a Down Payment did you make?
What is the property worth?
What was the accepted offer?
0 Reply
David Paez
OP
Member since 2018 · 17 posts · 1 vote
4y
Quote from @Alex Talcott:

I'll consider buying it.
You're welcome to message me.

What is your reasoning for that opinion?
0 Reply
Joel Case
Rental Property Investor · Ocean Springs, MS · Member since 2022 · 349 posts · 301 votes
4y
I would also hold it, that is some nice monthly cash flow.
2 Reply
Lynn McGeein
Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
4y
If you have a better use for the money, then worth selling. If you can invest and make a higher return with the profit now (after taxes) than you can by keeping it, if you can find better deals in this market, if it needs major upgrades that you don't want to deal with, if you need the funds soon for other reasons, then consider it. But I'd make sure I knew where that money was going and that it was going to provide you a higher return than you currently have now.
1 Reply
David Paez
OP
Member since 2018 · 17 posts · 1 vote
4y
Quote from @Joe Villeneuve:

Quote from @David Paez:

Quote from @Joe Villeneuve:

Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments
How did you buy it? What was the DP and what was financed?

Sorry , I don't understand your question
How did you buy it?
How much of a Down Payment did you make?
What is the property worth?
What was the accepted offer?

Direct message me please, thank you!
0 Reply
Steve Cooper
Member since 2022 · 9 posts · 4 votes
4y
If you sell, I would not, check ALL the selling expenses. Do not forget depreciation recapture. Can be big, if you rehabbed it, like roof, siding, hvac unit, etc.. Cash flow is great, in my opinion
0 Reply
Mike Smith
Boise, ID · Member since 2018 · 203 posts · 188 votes
4y
@David Paez To truly analyze your situation and give you a great answer, we all need a little more information.
1. What is the property currently worth? How much you paid for it is only relevant for capital gains taxes, but isn't very relevant to analyzing an investment property. I feel that if you won the home for free in a St. Judes raffle or inherited it from a rich uncle, the investment property analysis would be very similar to if you overpaid for it, and it's now worth less than the acquisition cost.
2. What is the annual net profit after all expenses are paid, not including the debt service (mortgage payment)? What is the annual net profit including debt service? What is the annual principal paydown on the debt?
3. What is your best reasonable guess about appreciation in the next 3-5 years? We have been through a period of double digit appreciation in many markets, but the general consensus is that appreciate will slow way down in 2022 and beyond. However, real estate is hyper local, so a national wide appreciation model will never accurately predict individual properties.
Once we have this information, we can give you your Cap Rate and COC (Cash on Cash) Return. You can compare this property to other investments you would make if you sold this property.
1 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
4y
The question is - what will you do with the proceeds?
Invest in stocks?
Invest in Bonds?
Stick it in the bank?
Go for broke and put it all into Bitcoin?
If you have a compelling answer to that question, then sell.
But, $4K per month in cash flow is a compelling reason to hold an asset in this environment. I won't be surprised if you come to the conclusion that there is no better alternative and pocket than to keep it and pocket the great cash flow each month.
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2 Reply
Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
4y
@David Paez this is very good cash flow. May I ask how you acquired it? How much cash did you invest to achieve this return? In essence it just boils down to personal preference. My multi's have increased but I can't find any reason for me to sell. Appreciation may take a hit eventually but I'm sure over a span of time it will increase far beyond what you have now. Also, imagine what your rent increases will be over time. If it's presenting you no problems and the cash flow is very strong, it's all good. One thing that could make me change my mind is if I sunk too much liquid cash into it. For instance, If I sunk a substantial degree of my capital in, to the point that the return isnt producing the desired percent then I may consider repositioning. However, over all a great cash flowing asset to that degree is great if you have a reasonable COC return.
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Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
4y
Quote from @Mark Cruse:

@David Paez this is very good cash flow. May I ask how you acquired it? How much cash did you invest to achieve this return? In essence it just boils down to personal preference. My multi's have increased but I can't find any reason for me to sell. Appreciation may take a hit eventually but I'm sure over a span of time it will increase far beyond what you have now. Also, imagine what your rent increases will be over time. If it's presenting you no problems and the cash flow is very strong, it's all good. One thing that could make me change my mind is if I sunk too much liquid cash into it. For instance, If I sunk a substantial degree of my capital in, to the point that the return isnt producing the desired percent then I may consider repositioning. However, over all a great cash flowing asset to that degree is great if you have a reasonable COC return.

Sounds like managing it is annoying to you. Try using a reasonably priced property manager instead.
2 Reply
Rodney Sums
Laveen, AZ · Member since 2016 · 584 posts · 528 votes
4y
Quote from @David Paez:

Quote from @Joe Villeneuve:

Quote from @David Paez:

Quote from @Joe Villeneuve:

Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments
How did you buy it? What was the DP and what was financed?

Sorry , I don't understand your question
How did you buy it?
How much of a Down Payment did you make?
What is the property worth?
What was the accepted offer?

Direct message me please, thank you!

I don't mean to be rude at all, but why ask a the question in public about your property if you're apprehensive about sharing very basic details about it? You were comfortable disclosing you take home $4,000 a month cash flow.
It would be challenging for someone to give you an accurate opinion whether to hold or sell without knowing what the cash flow is compared to.
Is there an investment you can make with the equity that's going to give you better than $4k/month if you sell?
4 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Quote from @Rodney Sums:

Quote from @David Paez:

Quote from @Joe Villeneuve:

Quote from @David Paez:

Quote from @Joe Villeneuve:

Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments
How did you buy it? What was the DP and what was financed?

Sorry , I don't understand your question
How did you buy it?
How much of a Down Payment did you make?
What is the property worth?
What was the accepted offer?

Direct message me please, thank you!

I don't mean to be rude at all, but why ask a the question in public about your property if you're apprehensive about sharing very basic details about it? You were comfortable disclosing you take home $4,000 a month cash flow.
It would be challenging for someone to give you an accurate opinion whether to hold or sell without knowing what the cash flow is compared to.
Is there an investment you can make with the equity that's going to give you better than $4k/month if you sell?
Agreed. Inquiring minds ~~want~~ need to know.
2 Reply
Mark Cruse
Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
4y
Quote from @Account Closed:

Quote from @Mark Cruse:

@David Paez this is very good cash flow. May I ask how you acquired it? How much cash did you invest to achieve this return? In essence it just boils down to personal preference. My multi's have increased but I can't find any reason for me to sell. Appreciation may take a hit eventually but I'm sure over a span of time it will increase far beyond what you have now. Also, imagine what your rent increases will be over time. If it's presenting you no problems and the cash flow is very strong, it's all good. One thing that could make me change my mind is if I sunk too much liquid cash into it. For instance, If I sunk a substantial degree of my capital in, to the point that the return isnt producing the desired percent then I may consider repositioning. However, over all a great cash flowing asset to that degree is great if you have a reasonable COC return.

Sounds like managing it is annoying to you. Try using a reasonably priced property manager instead.

Was this for me? Sounds like you quoted the wrong person.
0 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments

Too many people are selling just because the sales market is strong. But then what do you do with the money?
If you don't have a solid plan in place for the equity, leave it where it's at. Sell property only when you have make it work better for you somewhere else.
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Quincy Lockett
South Holland, IL · Member since 2017 · 376 posts · 432 votes
4y
@David Paez
The purpose of this post appears to just be a humble brag. Like the posts that say ‘I have 1 million cash, what should I do?’
0 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
4y
Quote from @Nathan Gesner:

Quote from @David Paez:

Hello, I have a question for the forum: I have a multifamily property (2 fam) in Medford MA that I bought in 2019, and the cash flow after paying expenses is about 4K a month. The property has appreciated as we all know. The question is: should I sell it now and capture the profit (~30% above what I paid)... or continue to rent it, manage it, and receive about 48K a year in cash flow?

Thank you for your comments

Too many people are selling just because the sales market is strong. But then what do you do with the money?
If you don't have a solid plan in place for the equity, leave it where it's at. Sell property only when you have make it work better for you somewhere else.
This is why you must have a plan in place that you are following...and, every decision you make along the way is based on the next step of that plan. You can tell how many don't have one by how many times you read, "...I just closed on..., now what do I do?". That deal they just did should be based on where their plan tells them to go next.
0 Reply
David Paez
OP
Member since 2018 · 17 posts · 1 vote
4y
Quote from @Steve Cooper:

If you sell, I would not, check ALL the selling expenses. Do not forget depreciation recapture. Can be big, if you rehabbed it, like roof, siding, hvac unit, etc.. Cash flow is great, in my opinion

Thank you!
0 Reply

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