Should I sell this negative cash flow house?

Question

Steve Milford · Answer

If it is cash flowing negatively already, you are already supplementing it now with your regular income. So I guess the question is, do you ride out the debt or sell to stop the negative cash flow?

There is no way to know because I don't know what the equity capture could be. For example, if you sold now and broke even is that better than waiting another year with negative cash flow (of potentially a smaller amount) and gaining $10,000 in equity? Only you can answer this.

Good luck, Steve

Peter Mckernan · Answer

@Tj M.

Is the house able to clear that total debt if you do sell it along with covering all selling fees? If that is the case that would be a good option to exercise, or you can pay off the second like it was person debt and keep the house. Either option is good, but I would suggest if you do not have the cash upfront to pay off the second, or a least a lot of the cash, I would sell the property take the cash after the sale and fees and then look to rebuild a downpayment for the next investment.

BJ McKellar · Answer

It would all depend on how much you are paying each month, how many years are left on the mortgage, and if you sold it would you make money.

I personally would keep the asset as long as your not losing so much that you can't afford it.  I look at it like this.  Lets say it cost your $200 a month and the house is worth $200K. If your tenants pay off that house for your in the next 20 year, is it worth paying $48K for a property that is probably worth $250K or more?  I saw yes.  Obviously it would be much better if you didn't have to pay the $48K, but all in all its still a great investment.

Just my personal opinion. These days its harder and harder to get a mortgage on an investment property.

If I would have help on to more of the properties I owned I would be better off today.  By selling it, you stop any future appreciation and are done.  Who knows maybe the house will double in value over the next 20+ years.

Just my 2 cents.

Should I sell this negative cash flow house?

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