Seeking Advice - Sell or Hold SFH Rental

[Tom Giles]

Background:

April 2013, I purchased a SFH HUD repo. (built in 2007) in College Station, TX for $89K.

The loan is a 30 year conventional at 3.75%, 20% down.

Rehab costs were about $12K so total out of pocket investment was about $30K.

I lived in the home for 26 months until May 2015, when I retired and moved to Florida.

The house has been successfully rented since I moved out starting in June 2015 and I am happy with the property management company. After preparing 2016 taxes, net taxable income for the year is $4700. I am not depreciating.

Comps on the house are between $140-150K, and estimated to grow 3.5% in the next year. I presently owe $67.5K.

If I were to sell the house before June 2018 my cash out after expenses should be between $60-$70K with no capital gains tax.

Question:

Should I sell the house before June 2018 and take advantage of no taxes on the $30-40K capitol gain or should I keep the house as a long term investment property.

[Greg H.]

I would take advantage of the tax free sale and move on to another investment.  Your return is not bad but in the years to come you are looking at some potentially big cap expenditures such a roof, a/c and other mechanicals that can easily eat up a year or more of your profits