Sell or Hold?

[Joel Kadlec]

Hey guys,

I just recently discovered biggerpocktes and I am very excited to start investing in real estate. I think I will want to be a buy and hold guy with an interest in multifamily properties. I bought my first property in 2011 at age 21 and got a great deal. I am now having to re-locate with my company and I was hoping to get some insight or advice if I should sell my house or rent it out. I am nervous about not being in the area for my first rental and was wondering if it would be better to sell and use the profits to re-invest. I am a newbie at all this and I am just now starting to educate myself on the real estate world so I would greatly appreciate any advice. Please bear with me if I am not including enough info. Thanks to all in advance! 

This house is located in Douglas County about 20 miles south of Denver and housing prices are sky rocketing here with very low inventory.

Hold Option:

Could rent for about $1,750/mo.

Mrtg- $1,065 ( I think the tax is included in it) (pmi of $149 in this too)

HOA- $103.70

Property Mngmt- $140

Total expenses- $1,308.70

Cash Flow- $441.3

Sell Option:

Loan amount: $143,080.43

Potential sale price: $240,000

Expense to close I estimate 5%?: $12,000

Profit to re-invest: $84,919.57

[Michael Seeker]

Not sure why everybody is talking about 1031 exchanges here.  You've owned this property as your primary residence since 2011 and stand to net about $80K in profit.  This is 100% tax free if you sell now.  If you start renting it out, then the tax situation gets muddy.  If you sell in 3 years and have 2 years of primary residence and 3 years of rental, then I believe a portion of gains are eligible to be tax free and a portion are taxed as LTCG or could be 1031'd into a new property.

Bottom line...you've got a tax free profit of $80K that you can take now and invest elsewhere in something that will be much better than ~6% COC return (you can stick it in the stock market and get that with no headaches). Sell the place and familiarize yourself with Tulsa then buy a few properties you want to hold for the long run as investments.