Hold or sell? Looking for advice

[Daniel Wittekind]

I have a home in the Shavano Park area of San Antonio I am ready to refinance and cash out for my first BRRR. My dilemma is with loan terms I will be cash flowing $50 a month whereas if I sold it I could profit $30,000 or more. In hindsight I didn't negotiate a low enough price. This area of San Antonio is expected to continue to increase in value but is it worth it to hold it or do I just sell and move on and do better next time? Listening to the Cash Flow vs. Appreciation podcast it seems in the beginning cash flow can be more important than appreciation. I only have two other rentals at this time. I'm leaning towards selling. Thanks!

[Dan H.]

It is amazing how many people use initial cash flow as though it is the only item that dictates total return.

I am not an expert on San Antonio, but if it were my property I would look at indicators like population growth, vacancy rates, quality of jobs and schools, wage increases, historical appreciation data, etc. and use that data to determine the likelihood of market and rent appreciation.  I would use conservative numbers in all areas (cash flow, market appreciation, rent appreciation, maintenance/cap ex expenses, equity pay down if loan is not fixed) to create a performa.  The performa would go out at least 10 years.  I would use the 10 year performa to judge if the RE is likely to produce a good return.

The result could very well be to sell (it likely is going to indicate to sell seeing that you apparently purchased without doing this exercise), but to decide to sell based on initial cash flow alone is making a decision without some critical information.

good luck