When to sell?

[Hilary Tuttle]

Good Morning, I have a question about when to sell. My husband and I have five SFH with a few paid off. When do you decide to sell vs buy and hold?

We have a house we paid 85k, put in 10k, and have had it rented for 8 years. We have a mortgage of 64k on it. If we sold I would list at 250k, which is underpriced for area, but it is a home built in the late 1800’s, so it’s not for everyone. It cash flows well.

But if we sold we could pay off our house mortgage, and actually make per month and save the on the interest we pay to the bank. But everyone always says buy and hold.

I know capital gains may be hefty on the sale. We have never sold and I don’t know much about this. But it seems like there is a lot of equity sitting in this house and we do not feel like getting any more rentals.

Any advice and thought are very much appreciated. What is the tipping point for most people?

[JD Martin]

If you want to access the equity and you don't want a mortgage, there's not too many other (safe, legal) options that you can take other than selling and getting out. 

That said, if it is a profitable rental, and you don't plan on getting out of the rental business altogether, why would it matter if you're paying on a mortgage? You could potentially use the sale of the house to finance your lifestyle in bulk - lots of people use rentals to finance their day-to-day lifestyle - by paying off a more expensive mortgage. Or you could just refinance what you have if it was done at a more expensive time.

There's really no good answer to your question. My experience, most landlord tipping points are when they are ready to get out of the business altogether from weariness or age or both. Few people sell profitable properties, unless the level of aggravation exceeds the level of profit.