Should I continue rent or sell this property?

[Emily Wilson]

Hello bigger pockets! 

Hoping you can help me with a sell vs. continue to rent scenario. 

My husband has a background in home renovation and is finishing up a renovating our current primary residence which is the second home we've bought (house B). Once the project is over we'd like to continue to buy and fix properties in our current city which is seeing favorable population growth but still has a lot of houses to be purchased and fixed up at reasonable prices. We own our primary residence (house B) outright so could refinance/HELCO that property to get cash for the next projects. We rented out our first home (house A) 8/2018 after living in it for 7 years. House A is in a quite desirable neighborhood an hour away from us in a town with a major university that has low inventory for housing and is the subject of this case study. It shows very well and when we advertised last year we got many well qualified rental applicants. It is a 2 bedroom 1 bath and just under 800 square feet.

Stats: 

purchased for 157k in 2011

interest rate 4.625

remaining mortgage 92k

property tax 2k/y, insurance 500. 

Currently rent it for 1350, would consider raising rent to 1450 for next tenants to match current market trends. Tenants love the place but are relocating.

Could sell for ~235k or so, possibly a bit more

House A is in a AE flood area but our lender did not require us to obtain flood insurance. Area had dramatic flooding last year but did not come close to the house. We've encapsulated the crawlspace and put in a sump pump but this designation could be a possible negative to buyers. There are a couple of things left to update (~4k worth) but otherwise everything is updated and should be a low maintenance rental for many years.

If we sold House A now we can capitalize on the lack of capital gains. However, this property adds diversity to what we hope will become a ~6 door portfolio. We have enjoyed being landlords and are managing the property ourselves. The appreciation in this town since we bought it makes it unlikely that we would be able/willing to purchase there again although we do not see living there in the future.

Rent vs. sell calculators that I look at swing the decision based on how I tweak numbers re: PM (currently 0%) vacancy and maintenance. 

Any thoughts, insights or additional items to consider would be appreciated!