Sell first property for handsome profit, or hold for cashflow?

[Tucker Long]

Hello BP,

I'm suddenly in contract to purchase my second property and lost on how to move forward. Here is the summary of my situation and options, would greatly appreciate any feedback to help get me out of this fog of indecisiveness.

The Beginning

A couple years out of high school, patiently searched for an investment property and bought a shell of a single family home in 2013 for $96k after 6 months of searching. Put $25k and four years of sweat equity into it (not doing that again :p). I came from construction, put new hard floors throughout the property, new windows, new bathrooms, etc. Roof is new. Upcoming capital expenses include paint exterior, hvac getting old, and no way to know how long the drains will last. This house is older than 1900. Near OSU campus, neigborhood is stable and rents supported by OSU and Columbus. I live in top half of the house, have my own kitchen and bath.

Rent bottom half out for $1,000/month (market rent $1,00), house is set up as duplex. After we split utilities, I damn near break even on the deal. I was house hacking before I know what the term meant. Pretty sweet!

Have the house on 30 year fixed 3.75, PITI only $742/month. PITI +vacancy, repair, cap ex, I can rent the whole house out for $2,200 and cash flow $1,200/month which is a 308% COC since I only put 5% down.

The present

I became licensed after my first purchase and have worked as an agent since 2014. I always keep my eyes out for great deals, but haven't done much marketing looking for off market properties; just keep my ear to the ground and talk to people in my neighborhood. Suddenly, a potential deal fell in my lap that I just got in contract on. The numbers look good from a traditional sense, but the height this market at makes me nervous. Meticulously maintained, all brick, historic home on coveted street a few minute walk from OSU campus. 5-6 bedrooms, only one bath and not so easy to turn into duplex. In contract at $230,000, ARV $290,000 in current market (have to assume that will change). Needs $15k in repairs, so not getting a very great bargain. The key thing to note is houses in these blocks DO NOT SELL. The cash flow potential is too immense, no one let's go of these things/they pass them on to family. I got this deal through probate research...

Have an investment loan lined up, 4.75% 15 year fixed, 20% down.

PITI+ 3% vacancy, 3% cap ex, and 5% repairs gives me cash flow of $885 (pretty nice for 15 year mortgage) with a conservative rent of $2,400 which is a 9 cap and 23% coc. Part of the deal here is I'm going to owner occupy for 2 years, but planning to house hack with current housemates and about break even again so I need to account for that.

The concerns

Firstly, I'm flat plain freaked out about buying a $230,000 house. I know I should cross this off the list of reasons to bail, it just stresses me out a bit to have such liability.

I'm stressed about the seeming uncertainty in the America's future. I understand no one can predict it and we can't sit on the sidelines forever, my hunch is we might never see this high of a market again so paying close to market value makes me anxious.

It's really the least of my concerns, but moving to the new house will be a reduction in space and privacy for me. Something I can live with, though.

The options

1. Continue my comfy, simple life house hacking as I have been for a few years and look for other deals I can buy further below market value in less secure neighborhoods

2. Move forward on the new contract, break even in new house with a few housemates, and cash flow on the original house for $1,200/month

3. Move forward on new contract, sell old house for a tax free profit of $100k-$140k.

Anyone care to share an objective opinion on what to do?