What is a good return on equity (RoE) for a rental?
A rental house I've had for a couple years just came vacant. I am on the fence whether to re-rent or cash out. Here are the #s:
$910 gross rent
50% vacancy & expenses
= $455 net ($5460/yr)
- $2100/yr interest expense
= $3360/yr net after debt. My actual cash flow is much less because I have it on a short amortization and am paying down the mortgage fast.
I could sell today and net after capital gains taxes about $36000. This means my current RoE is about 9.4%. I cant say I have anything much better to do with the money today if I sell, but this seems like a pretty low return on my equity. It will take me ten years to make the money renting that I can make today by selling. How does this RoE compare to others?