All Forum Posts by: Joshua Arsenault

Quote from @Tim Delaney:

@Joshua Arsenault I would only sell if you could walk away with at least 5 years profit (actual profit, not just cash flow). I’m also curious as to why you would sell this single family in Philly, but not your other one? If management from 6 hours away shouldn’t you be asking about selling both?

It almost seemed from your post that you were looking for reasons to sell this one with thoughts about what happens if the neighbor sells her property.

There is always going to be some risk and a headache or two with RE, but I’m guessing you know that already since you have three rentals.

It’s true that this one gives me more cause for concern. The other rental we have in the area is a small, single family brick ranch with no basement, built in the 1960’s and has long-term tenants. It cash flows better and has required less maintenance. 

Thanks everyone! This is really helpful. I think we knew holding a little longer would make the most sense - but the potential short-term $$ and the opportunity to divest from an asset that we aren’t sure about it’s long term needs was making us second guess.

I think we were also contemplating the eventual, inevitable housing correction and thinking if it’s around the corner, maybe having the cash in hand now from the sale would be better than seeing the equity dissolve and have to wait for it to build back up. We want to be in a strong position financially for a correction to play offense when things hit bottom - but of course, nobody knows when that will actually happen. But it has to happen sometime, no? 

Hi All, 

Looking for some advice here. We currently own 3 rentals - 2 single families in the Philly suburbs and a condo in Boston. We bought one of the single-family properties in 2022 right when interest rates started to pick up (ours is 4.375%). It's in a great location on the Main Line (Philadelphia Suburbs). Great schools, walking distance to shops and the train, 15 mins from the city. We did some work updating it and got it rented just a few days after putting it on the market. The property is cash flowing decently, but it's an old home (1920's), and has required more maintenance than our other rentals. And it's a twin. Our current adjoining neighbor is great and maintains her property, but there is always the fear that she'll sell at some point and who knows who the next person would be. Further, we moved out of state and have been self-managing the property from about 6 hours (drive) away - not ideal. 

The current lease ends 8/31, and we're weighing our options. 

1. We renew the lease with the current tenants as they've been stress-free the past year. (Probably our first choice)

2. They decide not to renew and we put it back on the market - potentially hiring a property manager given the distance - and cutting into our profits. We'd probably just break even, maybe slightly ahead on cash flow in that scenario. 

3. Sell it. With the work we've done and the competetiveness of the local market, our realtor thinks we could sell for at least $550K. Accounting for taxes, fees, etc. - both for the purchase and sale - our net profit on the home would be $50K - $60K. Not bad for 1.5 years, but we lose that asset and aren't in a position to 1031 exchange the profit - meaning a rather substantial tax bill. 

On the flip side (no pun intended), we bought the house during an equally competitive time and waived inspections. While the house hasn't given us any major challenges, given its age, who knows what could be lurking under the surface. We think we could sell it with waived inspections again and avoid any potential headaches the home might bring down the line. We'd also take some weight off our shoulders by managing a property out-of-state, and we'd get our down payment plus the profit back post-sale, and have about $150K for a future purchase. (We'd probably put it in a short-term CD for now at ~5% as we plan to buy a new home next year). 

Our intentions were to buy and hold this house (as was the case with each of our rentals), but life happens and circumstances change. We've really been going back and forth on what to do here - hold and maintain it as a rental one way or another, or sell it for a small profit and to avoid some current and potential future headaches. We'd love to get some advice, thoughts, feedback from the BP experts! 

Thanks!

Josh