Should I sell or continue to rent the property?

Question

We (wife and I) purchased a home to occupy in 2016 and 2018 I moved.  I had no upfront cost to move into a new construction home.  In 2018, we moved and started renting out the home.  I was cash flow negative (the house was on a 15 year fixed), and I recently refinanced to a thirty year fixed investment loan.  It now is $175/month in cash flow.  The house has increased over $30K in value, and now I have over $60K in equity.  I only had to put down $1000 total ($500 for appraisal and $500 at closing) for the refinance.  When I run cap rate ratio the home doesn't seem like a horrible investment.  When I run the ROI the home seems like a great investment.  Should I continue to rent the home or sell the home when the current renters move out in June?  Thank you for your help.

Nick Giulioni · Answer

What would you do with the money if you sold? Do you have another market? I’d leave it parked personally, but my strategy is buy and hold.

Nick Giulioni · Answer

Where do you want to go? That's fundamentally the question? Do you want to grow your portfolio or are you content with two paid off properties. Fundamentally different approaches (neither are wrong).

Wendell Clark · Answer

@Teri S. That helps clarify the situation.  Selling and paying off the second home put the most money in my pocket every month.

Teri Feeney Styers · Answer

Good job @Wendell Clark! This is a numbers game and it is easy to get side tracked by sentimentality or other things.

Teri Feeney Styers · Answer

@Wendell Clark which scenario puts more money in your pocket every month?

Wendell Clark · Answer

Nick,

Thank you for the advice.  If I sold the home, I would pay off another investment home I have.  I have three rental homes, one is paid off, the second I have 50% equity, and the third is the property above.  If I sold the above home, I would use the cash along with the additional cash I have to pay off the second home.  I would have two homes free and clear.  I am trying to analyze this property strategically.

I understand there are different real estate investing strategies and I struggle to figure out which one is best for me.

Should I sell or continue to rent the property?

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