Help deciding whether to sell or keep. Please advise.

Pocatello, Idaho
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Help deciding whether to sell or keep. Please advise.

Austin Fowler
New to Real Estate · Pocatello, ID · Member since 2020 · 6 posts · 5 votes

Hello all. I have owned a duplex since 2021 and have lived in one half and rented the other. I have ~$100k in equity and have a 3.2% interest rate. Mortgage is $1700, other unit is rented for $1250 but could be rented for $1500. The unit I am moving out of can rent for $1700. Those figures are based on market data and info I received from a property manager who toured the property. I am a block away from a university.

Here is the dilema. I have $50K in debt with a payment of about $1220 in a consolidation loan that will be payed off in 3 years. If I sell, I pay off the debt, lose the asset, and have no more monthly income from the property but I would be DEBT FREE, which is very enticing. On the flip side, if I keep the property and rent for the above values, I would be paying off the debt every month from the income, essentially making me debt free due to the payments being covered, and I keep the asset, which will start cash flowing a lot once debt is gone. 

I have moved out and could literally put a tenant upstairs NOW.

What would YOU do?     

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Jaime Duron
Realtor · Austin, TX · Member since 2019 · 69 posts · 28 votes
2y

Hi Austin Fowler! Instead of selling, have you considered getting a HELOC on your primary home? That could possibly be another choice, not sure what the rates are going right now, but essential you would have a line of credit for 10 yrs and still able to keep your home. Another route, is getting a Refi, but with rates where they're at I would go against that. Hope the little info helps.

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  • Jaime Duron
    Realtor · Austin, TX · Member since 2019 · 69 posts · 28 votes
    2y

    Hi Austin Fowler! Instead of selling, have you considered getting a HELOC on your primary home? That could possibly be another choice, not sure what the rates are going right now, but essential you would have a line of credit for 10 yrs and still able to keep your home. Another route, is getting a Refi, but with rates where they're at I would go against that. Hope the little info helps.

    1Reply
  • Daniel McDonald
    Real Estate Agent · Beverly, MA · Member since 2019 · 358 posts · 308 votes
    2y

    That rate, that cash flow, that small amount of debt, no way I am letting it go. I'd just keep grinding to get rid of that 50k. But I am very much so a buy and hold investor.

    1Reply
  • Denis PonderPro Member
    New to Real Estate · Yuma, AZ · Member since 2023 · 280 posts · 246 votes
    2y

    Assuming you want to be a landlord/B&H investor, I would keep it for sure.  Good cash flow on the property and will continue to bring you income and appreciation.

    I'm not sure of the numbers when you purchased the property, but assuming you followed the customary practice of 3.5%-5% down, you have a property with some very solid appreciation.  With that level of appreciation and cash flow, don't let that go!

    0Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Austin Fowler so you will cashflow around $1300/month?

    $50k / $1300 = 38 months to pay off your loan ... and you get to keep the asset.

    So many people are financially short-sighted and want immediate gratification, which is why so many Americans live paycheck-to-paycheck.

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    0Reply
  • Austin Fowler
    OP
    New to Real Estate · Pocatello, ID · Member since 2020 · 6 posts · 5 votes
    2y

    Thank you all for the advice. I have gotten a lot of responses here and elsewhere and I have decided to keep the property and rent it. Long term focus is what will make this so so worth it. 

    0Reply
  • April Rae
    New to Real Estate · Dallas, TX · Member since 2024 · 24 posts · 27 votes
    2y

    Given the numbers and assuming you can comfortably manage the property or hire a property manager, I would lean towards keeping the duplex. Here's why:

    1. Future Cash Flow: Once your debt is paid off in three years, you’ll have a solid cash-flowing asset that can provide ongoing income.
    2. Asset Growth: Property values, especially near a university, tend to appreciate over time.
    3. Debt Reduction: You can leverage the rental income to pay off your debt, essentially using your investment to achieve financial freedom.

    However, personal comfort and risk tolerance play significant roles. If managing a property feels overwhelming or if the security of being debt-free is more valuable to you, selling might be the better choice.

    Ultimately, the decision depends on your long-term financial goals, comfort with property management, and risk tolerance. Best of luck with your decision!

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    2y

    I agree with your choice to keep it and rent it.  With your $50K in debt, use the cash flow (keep some aside for taxes) to pay down the debt as well as any other money you can (assuming it is a higher interest rate).  Also look at capital gains in 2 years to see if you should sell it then or keep it as a rental.

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  • Daniel HymanBusiness Member
    CPA · Milwaukee, WI · Member since 2016 · 2k+ posts · 1k+ votes
    2y

    Its the classic financial philosophical clash between Dave Ramsey's debt-averse approach and Robert Kiyosaki's leverage-focused strategy.

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  • Adam Gott
    Pocatello, ID · Member since 2016 · 23 posts · 7 votes
    2y

    If you are in debt/financial trouble it seldom makes sense to try and fix it with more debt. If it were me I would totally ignore any suggestion related to getting a HELOC.

    0Reply
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