Negative Cash Flow Rental in Texas — Sell, 1031, or Hold?
Hello everyone,
Need some honest feedback from experienced investors here.
I bought a newer construction rental in Anna, TX back in 2022 for ~$466K (3000+ sq. ft.). Current estimated value is around ~$445K, with a remaining loan balance of ~$325K.
At the time, my thinking was:
- property appreciation would continue
- interest rates would eventually drop so I could refinance later
But as we all know, the exact opposite happened.
Current numbers:
- Interest rate: 6.25%
- Total monthly carrying cost: ~$2,828 (P&I + insurance + HOA + property tax)
- Current rent: ~$2,745
So on paper, the property is already negative cash flow even before maintenance, vacancy, turnover, leasing fees, repairs, capex, etc.
To make matters worse, the previous tenant abandoned the property, which created another financial hit.
With all this chaos, here’s what I’m debating (in preferred order):
- Sell now (even if it means taking a loss) and redeploy the capital elsewhere. I’m strongly leaning this direction given the rising property taxes, insurance costs, and honestly, remote landlord fatigue. Emotionally, I’m pretty done with it as well.
- 1031 into something more passive.
- Hold long term and hope appreciation eventually catches up.
Curious how experienced landlords would evaluate this from a return-on-equity and long-term portfolio perspective.
Appreciate all advice and perspectives.
Most Popular Reply
Looking at this strictly from a return-on-equity perspective, I’d ask one question:
If you didn’t already own this property, would you buy it today at its current value and current cash flow?
You’re carrying a property that’s already negative before repairs, vacancy, capex, and management headaches. Add rising taxes, insurance, and the stress of a tenant abandonment, and it’s understandable why you’re questioning the hold strategy.
Personally, I wouldn’t make a decision based on what I paid in 2022 or on hopes that rates eventually fall. I’d compare the equity trapped in this property against what that same equity could earn elsewhere today.
That said, before selling, I’d run the numbers on:
• Market rent potential after a refresh
• Property tax protest opportunities
• Refinance scenarios if rates decline
• Net proceeds after commissions and closing costs
• Potential replacement investments through a 1031
Sometimes the best investment decision is admitting a property no longer fits your portfolio goals. Other times, a temporary negative cash flow is acceptable if the long-term fundamentals remain strong.
I’d be interested to know: after all selling costs, how much equity would you actually walk away with, and where would you redeploy it?