Should I sell my rental property

Question

Hi community,

It's been a while since I've been here. Question for you wizards of real estate!!!

I have 5 rentals in Cleveland, one of them a house. It's been cash flowing well. We don't love being landlords, but it has been stable. Out of the blue, The renter has offered me an all cash offer, 3% commission, no inspections.

Here are the numbers:

- Bought for $92,000 in 2017

- Repairs for 10K

- Offer is $145,000

- Rents for $1150, $500 mortgage/insurance

If we don't sell the renter is moving out and there's probably 10-15K of reno's we need to do. Tax implication on sale per our accountant is $18,000. I don't have a 1031 lined up bc I wasn't expecting it!

I've considered selling and 1031 for another property, but oh, the interest rates.

I could use the money to pay off two other properties, saving $220/month in interest.

Thoughts? Ideas?

Nicole

Eliott Elias · Answer

I’m always in the boat to keep. Build WEALTH not income

Kate Barry · Answer

My advice is simple...if you don't have a plan for using the sale of the property to stack yourself into a better property, then hold onto it.  If its worth 150k now and needs repairs to rent it again, take out a small HELOC to do the 10-15k repairs when the tenant leaves.  When was the last time you raised the rent?  Personally to me the tenant moving out is a great opportunity to renovate, get higher rent, and hold onto your appreciating asset.  At least in my area the rental market is going stronger than ever before even though the housing market is softening

Anthony R. · Answer

There is wayyyyy more knowledge and wisdom on here than me, so I will defer to others for better answers and only offer my uneducated opinion...

What's your long term plan/goal? If you don't like being a LL, are you going to keep the other properties? Whatever you decide should help you move forward in your long-term aspirations.

It's going to be more expensive to your next investment property, so cheaper to hold what you have. Your tenant would be getting the better deal in the long run, in my novice and un-crunched-numbers opinion.

But if you don't want to be a LL anymore, take the money and do something else with it.

Nathan Gesner · Answer

1. Don't sell unless you have a plan for the money that moves you closer to your goal, or accelerates you towards your goal. Don't have a goal? That's part of the problem. You can't figure out which road to take if you don't know your destination.

2. Paying off mortgages sounds nice, but then you lose the tax benefits of deducting the mortgage interest.

Crunch the numbers. I suspect your house is cashflowing nicely, so why get rid of a winner? Would it be difficult to reinvest that cash into another winning rental? Is it beneficial to pay off the other properties? Maybe security is more important than another few percentage points? Is your Tenant offering you a fair market price?

David Krulac · Answer

I'm a big fan of IRS Section 1031 Tax Free Exchange.  Did eight last year and probably will do at least 6 this year.  You have 45 days after settling on the relinquished property to id a replacement property and 180 days to settle on the acquired property.  Has to be an invesment property but can be land, house, apt, commerical, industrial, etc.  Can't be a persoanl residence, second home or vacation home for you.

Eliott Elias · Answer

You have a lot of equity in it, take out a HELOC and keep your property for the long run!

Steven Foster Wilson · Answer

If you have had no problems with the area and you think you can get another tenant in there fast then I would not sell. I like to buy and hold unless you have something bigger/better you can 1031 that into. It does not sound like that would be a home run deal either on selling it.

James Wise · Answer

If you don't like the biz, and an exit is going to make you a decent chunk of money, yea definitely sell. Exiting a business you don't like with a hefty profit is a lot better than the alternative. Nothing wrong with knowing to walk away.

Should I sell my rental property

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