To Sell or Not - after 15% IRR

[Amit Rana]

Hello folks,

I bought a 4-unit in 2019 and put it up for sale few months back. I incurred a bunch of major repair costs over the years (e.g. new boiler, rebuilding of damaged porch, etc..) all paid through positive rental cash flow and so felt it was time to cash out. I got an offer which comes out to around 15% IRR after-tax.

However, I am now thinking of keeping the property because:

1. Don't know what to do with the proceeds (i.e. interest rates are high and finding a new property for 1031 might take some time) 

2. Cash flow is actually pretty decent and I can now increase rents having done most of the repairs 

Any advice/suggestions?

note: property has appreciated ~24% over the four years (per appraisal report)

[Alecia Loveless]

@Zachary Ware I’d keep it for now and enjoy the cash flow. You’re probably not going to find something else that will cash flow much better without taking on a ton more debt. But it’s all a numbers game.

I’m at the point where I’m just starting to see some nice equity in the buildings I bought in 2019-2020. It’s not likely selling them at this point would generate me more cash flow.

If you’ve got a lower interest rate on your loan then refinancing it probably isn’t the best bet. Build up your cash flow and save for your next deal.