Hi Everyone, 

I am new to the Bigger Pockets Forum and looking for some advice. I bought a condo back in 2014 and will be moving out in the next few months. My thought process was always that I would rent my place once I left, since I should be able to cash flow $600-$700/ month. A work colleague (who has now become my business partner) and I have dove head first into real estate investing and are finally ready to make our first purchase. I am now thinking about possibly selling my condo since the area in which I live has appreciated quite greatly, and I have enough equity that if I did sell, I would have close to 100k in the bank.  Having this capital would allow me to invest in larger and more profitable deals in the near future. Should I rent the condo and collect the cashflow for the next 25 years, or sell and have more money to really jumpstart my investment journey? Thanks!

Hi John, I believe the right recommendation will depend on what your next plans and if you have specific investments in mind moving forward. 

If you are happy with your condo ROI and don't have any urgency to sell right now, you may want to explore renting it and doing a cash out refinance or getting a HELOC if your concern is to have cash on hand for future opportunities. If you're in a highly appreciating market, that may be another reason to hold on to the property until you're ready for your next investment.

If you do have potential opportunities lined up, I would crunch some numbers on the ROI that you're currently generating vs. selling and reinvesting.

I would just be cautious and not sell without a specific gameplan moving forward. Hope this helps!

Hi Lawrence, thanks so much for the reply! Yes, your recommendation definitely helps! I think I am going to rent my place and reassess later down the road. Thanks again!

@John Granich : there are likely a few options you have.  First, are you allowed to rent your condo?  A lot of HOAs either don't allow renting or limit how many units in the complex are allowed to be rented, so you may not even be able to rent.

From there, does owning a condo as a rental help get you closer to your goals?  If you goals are to create a passive income portfolio or own large scale MF projects, then owning a condo may not fit within your goals. OR, does owning it keep you from being able to pursue other projects that fit in your goals?

Next, you don't have to sell.  You could always refi to tap into some of that equity and keep as a rental.  Your cash flow will drop some, but this route could let you keep the condo and still access your capital to do other deals.

Finally, if you keep, either as it sits, or refi, are you sure you have accounted for all expenses? The obvious expenses are principal, interest, real estate taxes and insurance. You also have your HOA fees. Is your HOA fully funded, or are you likely going to see a special assessment? Have your HOAs been increasing every year? On top of these expenses, you will have maintenance outside of the HOAs: Repainting, cleaning, plumbing, new flooring periodically, appliances, etc. You will also want to account for vacancy reserves: 5% essentially ties to one month vacant every other year, but you will want to have some reserves for that. And lastly, if you plan to hire a management company, you will likely pay 10% of gross for management, plus markups for repairs and potentially 1 month rent for leasing commission.

If I were in your position, I would sell and reinvest my money into a different asset.  If you have lived in the property for 2 years or more, you will not owe any taxes on your gains.  But my goals are likely not yours, so my opinion is just that: mine.

Originally posted by @John Granich :

Hi Lawrence, thanks so much for the reply! Yes, your recommendation definitely helps! I think I am going to rent my place and reassess later down the road. Thanks again!

Happy to help and best of luck!

@Evan Polaski Hi Evan, thanks for the reply! I have done all the homework/analyzing of my building and condo to see if renting would work, and yes the building does allow for renters. And I know what my costs including HOA fees would be, but you bring up a good point about goals. My goal is to own multifamily properties, and gain as many doors as I can. My current condo has always kind of been my safety net in case things fall through, I will hopefully always have that cash flow. But you bring up good points!