Hello, I am in dilemma about my investment house whether I should keep it or sell it. I bought a house in Austin area in 2007 for $310k which includes down payment, closing cost. Lived in that house till end of 2008 then moved to new location because of job. So had put this house on lease since then. So far, I have paid $150k which includes principal payment, mortgages, expenses, refiance cost, few changes in house. and now balance mortgage is $199k and as per Zillow market price is $364k. I have refinance my investment mortgage at rate 3.50 in 2012. so my monthly mortgage is around $1200 plus around $9000 property tax expense. I am getting around 2100 rent on this house and paying 6% of rent to property management company. So far, I am not making any money but paying around $5000 - $6000 per year from my pocket to keep this house. In one sense, It is good that I have a fixed asset and hopefully in future it will give me profit. But I want to know other people view on this - Whether I should keep this house or sell it and put cash into money market account so money can grow must faster. As this house is more than 7 years old, next year I have to replace carpet and probably few more investment to replace old house hold items. Please share your view so I can make a decision on this. Thanks

First brother find a real cpa, interview them make sure they understand investments. You said you have 150k in it? Do you really? Is that what you paid in or is that including all payments that the tenants paid? Also a good cpa would have depreciated this property the day you moved out so just back of the napkin should have been maybe 10k a year. Then you can right off interest portion of your payments and your property taxes. And I believe that because you cash flowed negative you can right some of. That off. I am no accountant, but that sounds like maybe 20-30k a year in right off. The other thing is you bought a non investment house and tried to turn it so you live and learn. My view on things is it only cost me what I put in. Not what my tenants pay. The only cash that I pay is my down payment, and my personal residence. So I have a 300k house that cost me 10k 10 years ago plus some rehab so that means I bought a house now worth 300k for maybe 15k. That is a good return. But as far what to do, I would sit down with a real accountant and talk to them, my bet is you may only be 100k in it and you might be able to right off the lose on this years taxes. My .02 I'm not as experienced as others but take for what it is.

Hello, I need more help to understand on my investment calculation. As I mentioned that I have invested around 150k that is (sum of (all expense, principal amount, interest and property tax payment, HOA, Landlord Insurance) - rental income). Out of this $150k , I have paid out around $127k for interest and property tax. I have claimed these in my tax filing. So I want to know how much these $127k has saved me. Can I assume it is atleast or minimum 25% of $127k ? If this statement is true then my investment is going to reduce to $125k and this number will make me break even. I really need help to understand this logic, Please let me know if you need any more info to help me. Thanks

You're really making all your bad decisions worse by going to H&R Block. While Block is ok for a basic tax return with few complexities, your current situation is far from basic. You're amending three year worth of tax returns, but you've also got a few years worth of depreciation that you CANNOT amend your tax return for at this point. 2008, 2009, 2010 and 2011 can definitely NOT be amended and depending on when you filed your original 2012 return, that may or may not be able to be amended. However, your gains/losses will be based on depreciation that was deducted or deductible. This means that your gains are based on an expense you never got to take for 08 through 11 and you'd better make darned sure that it's calculated absolutely correctly, particularly if you're considering a 1031 exchange. A bad calculation now will haunt your future transactions. I wouldn't have enough faith in H&R Block to get this right. Get recommendations for a CPA with real estate knowledge. There are a few on Bigger Pockets that are able to work with you remotely if they are not local to you and I'm sure there are BP members in your area who can recommend a professional who knows what they're doing, not some person who just took their first tax class last fall.

Thanks for suggestions. Update : 1. Fired my tax consultant 2. Spoke to HR block and it seems HR Block person understands my situation and wants see my tax filing papers to make sure that make sense to file rental property depreciation for last 3 tax years which is 2014, 2013 and 2012. I hope that should work, at least some thing better than nothing. Still i will prefer to get more advice from you guys to make good decision to sell house. Thanks

my opinion, worth what it cost :-). If we are not at a market top, we are in the ballpark range and you have a pretty high dollar rental. Ask yourself....if I had 150k would I buy this house as an investment? Many or most people in this rental range can buy...if not now, eventually. And your price range for selling is not as hot as the lower ranges, they are building new in that range just up Parmer. Actually all over around Avery. And in Avery. New means new hvac, roof, etc...get the point. You take depreciation because houses depreciate. ;-) Will your current tenants buy it? Do you really have to replace the lawn to sell? How much would it cost you in resale to not replace? Unless it is completely dead, it can be nurtured back with fertilizer and good ol h2o by the buyers. Is recarpeting your best value? Bad lawn and hardwood floors vs new lawn and new carpet? I would choose the latter. If you keep it as a rental, people dont like carpet. and you should require watering the lawn...is there a sprinkler system? In that price range tenants start to feel entitled...and who blames them, for shelling out 2k a month you hate to have to spend weekends lugging a sprinkler to water someone elses lawn. My tenants keep up the front to appease beighbors and the back if they have kids or dogs. Only one waters much.

Meanwhile, see if you can amend your prior year taxes to get some federal and state income tax back. I would be surprised if you wont get money back, considering that your expenses (even without depreciation) are higher than the rental income. Also see if you can increase rents on the property, and make it profitable year after year.

Should I sell my investment house or not

Rob Beland

Investor · Leominster, MA · Member since 2011 · 1k+ posts · 589 votes

11y

You could consider where the Austin housing market is. The property has appreciated somewhat but will it continue to go up or do you think it's at the top of the market? You're paying $9K/year property taxes on a house worth less than $400K? That's pretty steep but not really anything you can control I guess unless. Is that a correct figure? Also, I assume you are depreciating the property and all expenses/income are going on a Schedule E? What is the whole picture looking like with insurance and other operating expenses? What are the loan terms? I'm inclined to think you need to sell and get your cash out of the house and find a better investment. Those taxes are killing you. Drop that house in another market somewhere and you could reduce your taxes by 70%.

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Jai Reddy

Edmond, OK · Member since 2012 · 456 posts · 270 votes

11y

@Hemender Devangan

I would echo Rob's question, are you using depreciation of the property to reduce the 5-6K you are paying out of pocket on this house?

Should I sell my investment house or not

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