Advise whether to rent out or sell my property

[Scott Kelly]

Hey everyone, 

I'm new to BP. I recently bought a new house and have listed new old property for rent but I'm having trouble deciding if its my best option. I bought the house 2.5 years ago for 195k. I put 30k into remodel. I had it appraised 3 months ago to drop my PMI. It appraised for 255k. I have it listed to rent for 2100. My mortgage is just shy of 1500. From my understanding in Texas you can't take a heloc out on an investment property so I don't see a way to take my equity out to reinvest in a future property. So I tempted to just sell it and get the equity out to invest into a different property. I appreciate any feedback, thanks in advance!

Scott Kelly

[Doug Shapiro]

Hi @Scott Kelly,

Have you looked into doing a 1031 exchange?  That may save you a bit with taxes.  

It may help you to get a detailed estimate of how much it would cost to just sell the place outright. Typically you would have to pay 6% for broker fees, closing costs, taxes, holding costs, etc.  

With a mortgage, selling within the first 7ish years is not great because you pay mostly interest during this time and the principal balance doesn't go down by much.  

My initial thought is that you should probably hold the rental property and not sell it.  I would only sell it if you are seeing better deals on the market and need the cash to buy.