Updated over 3 years ago on . Most recent reply
Fix then Sell or Rent?
We acquired a rehab for about $30,000. Requires about $18,000 repairs. ARV for property is about $85,000. Average rent in area is about $800. Would you sell or use property for rental after repairs? Whats the best rationale for either? If partners are split on either route and consequently have to sell prior to any repairs, what price point makes most sense?
Most Popular Reply
It comes down to what you want and what you will do with the proceeds.
Personally, my goal is long-term wealth through real estate. I buy properties like what you are selling in order to hold them, long-term and build wealth through appreciation, cash flow, and debt amortization. I also like the tax advantages of long-term real estate investing, vs the ordinary income that flipping generates.
In your case, it sounds like you have a partner in the deal. If they want to sell, then you should sell. You don't want to be in a long-term investment with a partner who does not see eye to eye with you. Another option, if you would like to hold the property, would be to cash out refinance. If you can both agree on an ARV, then you could pull out a mortgage on the property and use the cash to pay out the partner who wants to sell, moving them off the title. This might even be tax advantaged for them (if there is no sale, is this ordinary income for them?). Something to ponder with an accountant.
