Looking for some advice here. We currently own 3 rentals - 2 single families in the Philly suburbs and a condo in Boston. We bought one of the single-family properties in 2022 right when interest rates started to pick up (ours is 4.375%). It's in a great location on the Main Line (Philadelphia Suburbs). Great schools, walking distance to shops and the train, 15 mins from the city. We did some work updating it and got it rented just a few days after putting it on the market. The property is cash flowing decently, but it's an old home (1920's), and has required more maintenance than our other rentals. And it's a twin. Our current adjoining neighbor is great and maintains her property, but there is always the fear that she'll sell at some point and who knows who the next person would be. Further, we moved out of state and have been self-managing the property from about 6 hours (drive) away - not ideal.

The current lease ends 8/31, and we're weighing our options.

1. We renew the lease with the current tenants as they've been stress-free the past year. (Probably our first choice)

2. They decide not to renew and we put it back on the market - potentially hiring a property manager given the distance - and cutting into our profits. We'd probably just break even, maybe slightly ahead on cash flow in that scenario.

3. Sell it. With the work we've done and the competetiveness of the local market, our realtor thinks we could sell for at least $550K. Accounting for taxes, fees, etc. - both for the purchase and sale - our net profit on the home would be $50K - $60K. Not bad for 1.5 years, but we lose that asset and aren't in a position to 1031 exchange the profit - meaning a rather substantial tax bill.

On the flip side (no pun intended), we bought the house during an equally competitive time and waived inspections. While the house hasn't given us any major challenges, given its age, who knows what could be lurking under the surface. We think we could sell it with waived inspections again and avoid any potential headaches the home might bring down the line. We'd also take some weight off our shoulders by managing a property out-of-state, and we'd get our down payment plus the profit back post-sale, and have about $150K for a future purchase. (We'd probably put it in a short-term CD for now at ~5% as we plan to buy a new home next year).

Our intentions were to buy and hold this house (as was the case with each of our rentals), but life happens and circumstances change. We've really been going back and forth on what to do here - hold and maintain it as a rental one way or another, or sell it for a small profit and to avoid some current and potential future headaches. We'd love to get some advice, thoughts, feedback from the BP experts!

Thanks!

Josh

Philadelphia, Pennsylvania

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