Take Cash & Run

[Bruce L.]

So, I purchase a property back in 2012 for $80K cash in Vegas, put $10K into it and rented for $1100 a month.

My yearly cashflow is $9K, sorry 50% rule.
I would be making $60K minus capital gains taxes & selling fees.

It would take me 6.5 years to make that up if I kept the rental, and of course the time being a landlord.

The property is worth $150K all day "today", based on sold comps.

• Should I take the cash & run or keep it as a long term cash cow?
• Goal is to have 10 free & clear properties to cash flow long term in about 10 years. Currently have 3.
• Thoughts? Market is definitive slowing down.

[CK Hwang]

Hi Bruce,

it's hard to advise you not knowing what your full financial situation is, but personally, I would take the cash and run. My threshold is basically if capital gains exceeds 5 years rent, i cut out, the reason being that the odds of seeing one real estate boom bust cycle is high.

The only exception I use is for very high quality real estate where in a down cycle, you will not see much for sale. for example I am currently holding onto a SFR rental walking distance to beach which meets my 5 year rule, but i'm not selling due to the rarity of finding real estate walking distance to beach. In that case, I will normally use a 8 or 10 year capital gain in place of rent before I will sell.