Sell or rent a recent purchase.

4 Replies

Recently purchased a 3B / 1.5B and my intent was to rent and hold. I have 122K invested total after rehab and was initially estimating the house had an ARV of 150K. Found out today that was incorrect. It would be valued at 200K. Vary happy about that but never had that happen before and would like someone's opinion on should I keep and rent or sell and take profits and reinvest? Thank you in advance.

Terry

@Terry McPherson Congrats, great problem to have! Depends on you goals and future plans. Have you thought about renting it for a year, then selling it? This way instead of paying about 30% capital gains, you’ll only pay 15%. Or you could sell and 1031, however you’ll have to stick to a strict timeline with your next purchase to avoid the big tax hit.

@Terry McPherson , if your intent was to hold and something relevant has happened to change that intent then a 1031 would be appropriate.  You wouldn't want to have that accident 6-7 times in a year but once is probably OK.  Just be sure you can point to your history or correspondence with your professionals.  

Thank you guys for your time and input.  Decided to hold at least for a year, for the very reason you stated Mike. 👍🏻   Can’t hardly stand the thought of giving up 30% of the profit.   For me those profits don’t come around to often so want to capitalize as best I can.   Thank you guys! 

Regards, 

Terry