Own a 2nd home we currently rent, paid low... should we sell now?

2 Replies

Hi, I'm new on here, excited about finding it!! Long story long... My wife bought a townhouse in 2010 for 89k. 0% down USDA loan. We met, and moved in together into my house, and began to rent hers out. We currently owe 75k, like units are being sold for 140-150k. Should we sell and do a 1031 exchange? Or rent it out again? It currently rents for $1250 per month and our expenses (including repairs and cap ex) are $1126. Not a high cash flow but if I've done the calculation right the cash on cash ROI is 24% because she put $0 down... so the question remains sell or rent??? Thank you for your time

@Kyle Lefebvre The question you have to ask yourself is what is your goal high COC or high cashflow. I would personally rather have $200/month cashflow than 24% COC that is only $50 because I had $0 down. Other considerations if you sold and had $60k to invest in a property could you find a SFH that would do better? I would switch asset types to SFH or Small Multi because the appreciation is better on a SFH than it is on a Townhouse. But it all depends on your goals and the numbers. I imagine that the HOA fee you pay on the Townhouse is killing your cashflow.

@tylergibson thanks for the reply, I'm looking into SFH now, will also look into multi family. Yea HOA is $274, which provides lawn, pool, gym , and a sports complex which I feel helps get us the $1250 for rent, without all that I'd imagine it would get 900-1000.... thanks for your input! We're also nervous about the 1031 exchange to avoid capital gains. So much to consider....

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