Worth it to hold?

Question

We just bought a duplex in July. We are renting out 1 half, and living in the other. When we got the tenant, the amount was good. They just hiked our taxes and I fear rather rent amount just won't cut it anymore. We just signed a new lease with them and the new mortgage payment mad eits surprise debut a month after renewal. Because of location, population, etc, I don't foresee being able to raise rent much more. She's paying $1300 right now. It's a 3/2.5, 1500 Sq ft. The market here doesn't have high rent prices. Not much equity in it. Do I cut my losses and sell or hold and pay a few hundred out if pocket?

When we eventually move out and rent to another on our side, it won't cash flow. It'll be a couple hundred negative. Advice Is much appreciated. First rental property and still learning.

Andre Taylor · Answer

Yeah you could sell to cut your losses but question how big of a loss would you have to take? If I was a potential buyer the price has to be right with these high rates to make sense so if you sale for a high price that doesn't work for a buyer then they could be low balling you alot. Maybe hang on until rates go down some so that it has a chance to cash flow for the right borrow or you refinance to help with cash flow. How is the appreciation in the area? do you see the value going up long term?

Elizabeth Bates · Answer

Just commiserating - I’m in the same boat in New Orleans and have owned my home since 2017. With insurance and taxes skyrocketing, my profits will go from healthy to in the red as of September 1 😫.

Malcomb Stapel · Answer

@Gina Huerta  if it's not cash flowing now and is never going to be, it's probably time to let it go. However, consider that they are making part of your monthly payment, so if you sell, you may be out even more a month if your paying for a single family home.

Gina Huerta · Answer

Hi. So update on where we stand. And I have a question. I know to avoid cap gains it's 2 of 5 years living in it. But what if you lived in and owned for only 2 yrs? What if I sell after being here forb2 yrs only. I bought it July 2022.

so we became landlords after having to sell our much loved home due to a big family crisis. Once back on our feet we bought the duplex thinking maybe this was a path for us, but I don't think I like landlording and living where I don't want to. I have an fha tied up in the loan and we want to buy a home for once and for all. So we are really leaning into selling it.

This is why I ask about Cap gains. If I can own and live in it till June to avoid gains  i will. But if i had to own for 5 yrs, then theres no point in waiting and sell it now.

A realtor I spoke to said maybe we can sell to an investor who we could actually turn around and rent from them until we finish finding or building our new home. Is this crazy? I ask here b/c on Facebook ppl can be really mean and judgey. I'm trying to just do what's best for my family and make an informed decision. Thanks again.

Mark Lewis · Answer

Hey @Gina Huerta, this is unfortunate and I’m sorry to hear. Was this a new build when you purchased with the unawareness of what your projected taxes could be? I remember in 2018 duplexes and quads in the valley made sense because of the price point but now they don’t cash flow as certain places in America don’t at the time with the interest rates. If you aren’t missing any meals I would try to hold for the long term. Eventually rents will go up and hopefully catch up to your mortgage. Entry price is super important in the current environment we are in now. My rents rose from $1,200 in 2018 to $1,650 2023, So a 37% increase over five years. If you are at a high interest rate maybe when they come down, you can refinance so it cash flows then, or comes close to cash flowing with some appreciation.

Anthony Garza · Answer

Would you be interested in seller finance ? In what city in Rio Grande Valley is it in? I might be interested if the deal makes sense.

Brady Ferguson · Answer

I would not consider selling until you have a better alternative in line. At the end of they day your tenants are paying a large portion of your housing. If you are looking to sell due to lack of cash flow, I would find a better living alternative before hand. If you move out then want to sell it because it still doesn’t cash flow that is more understandable

Worth it to hold?

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