would you sell or hold on?

Question

I have 6 doors in New Mexico that net me around 1800 each month in rental income.  They are in an area where I don't expect to see much appreciation, but they do kick me off descent income each month.

My 7th property is in Portland, Oregon.  On this one, I'm losing approximately 600 each month.  So all in all, I'm taking in around 1200 each month after the NM gains are offset by my OR loss.  If I were to sell the house in Oregon, I'd walk away with around 115,000 and could 1031 exchange into a quad in New Mexico or something like that which would bump my monthly income to more like 3,000.

My rationale when I bought the Portland house was that I'm from Portland and I was afraid that if I didn't buy something I'd eventually just be priced out of my home city.  That's the main reason I am still considering keeping it is that worry.  I guess the other thing is that when I purchased it, I sort of drew a parallel to stocks - my Portland house was like a growth stock/hoping for appreciation whereas my New Mexico houses are like dividend stocks/income producers.

What would you do?  Am I crazy to hold onto it or should I just keep it?

Tyler Gibson · Answer

@Aaron Hollingshead Is your Portland property an asset or a liability? Before you answer think of what rich dad would say. You bought it with an emotional attachment (home town). Do you plan on moving back to Portland? If you owned the same house in New mexico would you even consider keeping it?

I would sell and redeploy for better cashflow.

Account Closed · Answer

@Aaron Hollingshead hey Aaron, anything you can do on the Portland property to drive up rent? What is the main reason you think for the $600 monthly loss: periods of vacancy, general location of property, amenities, other?

Bryan Danger · Answer

I'll play devil's advocate here (as someone who also is from Portland, loves the market in our hometown and has also seen a LOT of people get priced out of the market over the years).On one hand, the other posters are correct... in terms monthly cash flow this doesn't loo great, but decisions are rarely that cut and dry.  IF this house helps with your future plans to return, than its still worth trying to make the investment worthy of staying in your portfolio.  You say the rent is max'd out now... but have you considered using Portland's VERY liberal codes to add value or even another rental to the property?  Considered Airbnb or other short term rentals?  Looked into adding on an ADU to add value to both the property and your monthly cashflow?  We had a similar issue a few years ago with a couple of our places in Portland and were able to do some very affordable projects that turned those underperforming properties into some of our best performing/most profitable properties!Portland also recently passed a massive zoning change that allows any residential zoned property be turned into a plex... I'd at least look into some creative options for expanding the property/value before just ditching it.

Bjorn Ahlblad · Answer

@Aaron Hollingshead lose 7200 per year? No way. Portland won't appreciate the same in the next 10 years as it did in the last 10. Moving back or not, I'd be selling and buying a better performing asset.

Joe Villeneuve · Answer

It sounds like that Portland house should have been sold years ago.  There is absolutely no reason (good one at least) in the world to keep it, and a number of them, with $$$ in front, to dump it as fast as you can...and don't look back.

Account Closed · Answer

@Aaron Hollingshead

Personally I'd sell and use the proceeds on a 15% second position note with the subject property as collateral (Portland metro single family or multifamily) that, if foreclosed, can pay off the first and your second over 2x and yield $1400 a month.

Aaron Hollingshead · Answer

Account Closed - the rent is, I believe, as high as it can be.  Bedrooms are all small, bathroom off the kitchen and on a busy road so we're attracting young roommates as tenants rather than a family...those factors are dictating our rental amount.

@Tyler Gibson - there's no way in hell I'd keep this place if it were in NM...I do see your point about the emotional side of this one, I can't deny that.  I do want to move back in 10-15 years at which point I'd like to have a house free and clear, but it wouldn't be this particular house.

Account Closed · Answer

@Aaron Hollingshead I think I would probably unload it then, concentrate on the cash flow. In 10-15 years you might be able to buy a place free and clear.

Zachary Ray · Answer

I would get rid of it and use the proceeds to gain another cash flowing asset. That is the beauty of real estate is you can swap properties for new ones when ever you want.

Brad Hammond · Answer

@Aaron Hollingshead, I agree with @Mathew Wray.  Now is a great time to sell in Portland and I don't think prices will continue to go up over the next 18 months like they have the last 18 months.  Since you are not going to be living it, you should reinvest it into something different.

Like what Mathew was saying, it is harder to sell a property with tenants in it.  You would need to give them 90 days notice to vacate if it is going to be an owner-occupied home.

would you sell or hold on?

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