Should I sell my Northern Colorado rental?!?!?!?!

Question

Hello!I'll try to make this short... I bought a primary in 2013 for 175k before the boom in Northern Colorado, which is now a rental. The mortgage is $1000 and it rents for $1650. Because we lived it two of the last five years if I sell it within the next 11 weeks I won't have to pay capital gains tax. in case your not familiar with this market, at this time, 11 weeks is not unreasonable and homes in this price range generally go under contract in a few days. I owe 165k and I could likely sell it for 300-310 (if not more but I want to be conservative). I do not have a real estate license  so after fees I think I would walk away with ~117K. However, I love the home and we were hoping to move back in our girls left and it was paid off. In truth, we've had to put a lot of money into it (new floors, fence, windows, bathrooms). Much of the money came from a refi but we just had to lay out about 12k more. So my options are to sell now and walk with the cash or keep it as a long-term rental for passive income now that a lot of the issues have been addressed. Thanks in advance!

Theresa Harris · Answer

If you are planning on moving back, don't sell it.  I bought a couple of rentals in one area because I plan on retiring in that area, not necessarily in one of those houses.  The market is very different than where I currently live and I needed to find a way to keep up with local prices.

Aimee Lawrence · Answer

Account Closed I think the property would make a great home in retirement, but we have two daughter and who knows where they will land when they are older! Thank you for your insight!

Account Closed · Answer

I think it depends on your goals as an investor. If you're trying to build a portfolio of properties, or eventually move back into that specific home, why sell? But if you're not sure about either of those scenarios, I'd sell. Why? Because it's not very often you can make $120k tax free. Taking home $120k requires earning substantially more than that to account for taxes (not to mention your time/energy).

I was in a semi-similar situation only because I had that 2/5 year rule coming up. I decided to sell because 1. I had other rentals that were performing well and 2. I could use the cash to make additional investments in flips and larger commercial deals as well as investments in non-real estate ventures. Having that baby bank of capital allowed me to grow my money faster. Fortunately, I didn't spend the cash on a Porsche like I really wanted to :-)

Aimee Lawrence · Answer

@Ian I Leinwand my plan would be to pay off some student loan debt(maybe, the interest rate is so low) pay off the 15k we just put into it and then sit on the rest until the next recession. It’s a townhome, 2/1.5, and the HOA is only $38 a month. We just put so much work into it (new fence, patio door, windows, roof coming, exterior paint, paver patio, furance, all the big ticket items) so while it hasn’t been hands off I’m hoping it will be from now on.

Aimee Lawrence · Answer

@Logan Brown I will definitely keep your information. We had the worst time finding contractors that both showed up and did a halfway decent job. Thank you so much!

Ian I Leinwand · Answer

If you sell... what are your plans for the cash? If its a pretty hands-off rental keep it especially if you want to move back into the home. Fort Collins is a traditionally stable rental market... lock in a low mortgage rate and let the tenants pay it off. How many beds and bath and square footage $1650 maybe a little low for the current rental market if its a single-family 3/2 or larger in good shape and in a good neighborhood.

Blake Stevens · Answer

Don't sell unless you have a plan to turn that money in to more rentals.  If you need money back consider a refinance, rates are low and that is tax free.  I feel long term wealth comes from rentals.

Logan Brown cool to see you got a real estate license and are doing some contracting.I have 2-4 flips sitting waiting for my crews to free up in Greeley, maybe you want to take on one of the renovations or maybe you want to buy one.  I plan to sell 2 of the 4.

Logan Brown · Answer

Hey Aimee, what part of town is the house in? I know the selling price sounds quite lovely in Fort Collins, but I feel like if you've already got something.with a mortgage that low, it's worth keeping.

If you ever need any help with maintenance, upkeep or remodeling, feel free to PM me. I'm. a local contractor.

With the way the market is, and how historically steady FOCO has been over the last decade (at least), I would say hold onto it, especially if you aren't stopped for cash.

Those are just my personal thoughts, only because we've been out of the home-owning market for nearly 3 years and we are looking to buy something again and it seems rather daunting.

Good luck!

Should I sell my Northern Colorado rental?!?!?!?!

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