Should I sell my rental property

[Nicole S.]

Hi community,

It's been a while since I've been here. Question for you wizards of real estate!!!

I have 5 rentals in Cleveland, one of them a house. It's been cash flowing well. We don't love being landlords, but it has been stable. Out of the blue, The renter has offered me an all cash offer, 3% commission, no inspections.

Here are the numbers:

- Bought for $92,000 in 2017

- Repairs for 10K

- Offer is $145,000

- Rents for $1150, $500 mortgage/insurance

If we don't sell the renter is moving out and there's probably 10-15K of reno's we need to do. Tax implication on sale per our accountant is $18,000. I don't have a 1031 lined up bc I wasn't expecting it!

I've considered selling and 1031 for another property, but oh, the interest rates.

I could use the money to pay off two other properties, saving $220/month in interest.

Thoughts? Ideas?

Nicole

[Nathan Gesner]

1. Don't sell unless you have a plan for the money that moves you closer to your goal, or accelerates you towards your goal. Don't have a goal? That's part of the problem. You can't figure out which road to take if you don't know your destination.

2. Paying off mortgages sounds nice, but then you lose the tax benefits of deducting the mortgage interest. 

Crunch the numbers. I suspect your house is cashflowing nicely, so why get rid of a winner? Would it be difficult to reinvest that cash into another winning rental? Is it beneficial to pay off the other properties? Maybe security is more important than another few percentage points? Is your Tenant offering you a fair market price?