Should i sell my rental duplex?

Question

Answer

You sell for $240k, net $215k, pay $10k in taxes, net $205k, pay off your mortgage and what do you have left? For that much cash you’re giving up more than $1200/mo in income? I don’t see how selling can be a good deal.You give up more than $15k a year to have how much more in the bank? 50k? (You’re paying 30% “interest” on that money), or even $100k (then you’re only paying 15% on that money.) what are you going to do to earn more than that percent?

Answer

@Aram Minasyan and that's not a bad strategy to have! But again, having the cash on hand sounds great, but right now you're looking at next to impossible odds on selling your current property at full retail value. The minute your property sells at the prices that you were mentioning earlier, it means that the market is coming back up and you've likely missed out on those opportunities that you had at the bottom of the market. It really is a catch 22, but luckily, you're in a spot that there's really no bad outcomes. Good luck!

Answer

@Stetson Miller I don’t have a great property that I am looking to get at the moment, but I have seen a few come come and go. The problem is having the cash when the opportunity does come along, and that’s hard to predict when it will. This post and your feedback has forced me to think about what my goal is, and I think ultimately what I am looking to do is have liquid cash ready, so that if the right opportunity does come along in this volatile market, I will have the ability to jump on it.

Answer

@Aram Minasyan If you have a good stock investment or another property picked out, like a quadraplex, that you are confident can net you a higher rent income, combined with the ease of management closer to home, then it sounds like you may have already made your mind up. On the other hand, I would be happy to talk more about management if that's something that you're having trouble with, just send me a PM!

Answer

@Aram Minasyan In the last 30 days, there have been 14 duplexes sold within Lehigh. Price range from 191,800 - 309,000. I'm looking at a property now on the MLS that has similar rents and sold for 224,000 on 3/12. Before making a decision, getting all the information necessary to make a decision will be important. Additionally, you'll have to take a look at the current condition of the home. I know a lot of investors who are selling all of their properties that are 15+ years old; for fear of upcoming repairs (roofs, A/C & boiler). These pending expenses can mean some serious risks long term.Let me know if you have any additional questions!

Answer

Thanks @Stetson Miller, I appreciate your input, especially from a local. I am certainly not trying to hit a peak or a bottom, but i think i am modestly up on my investment, and I have been wanting to use the proceed to get into 4 plex potentially. It seems like given the uncertainty in the market, some good opportunities might open up in the Real Estate market or even Stock Market. Additionally, I am from Seattle and this property is in Lehigh. The distance between where I live and where i have the duplex also makes it a bit difficult to manage. Another reason for wanting to sell.

Answer

Hi @Aram MinasyanYour decision to sell the property or not will all depend on your long term strategy. You're obviously making great profit on it now, so what is your reasoning for wanting to change that? If this was originally a long term hold deal, then I say you've achieved what most strive for and now have a cash flowing property to help contribute to your financial freedom.On the other hand, if you have a clear second option that will allow you to either purchase an even better deal, or invest the money elsewhere for a guaranteed higher ROI, then you have the other obvious answer. I will advise that if you do decide to sell it, timing the market is not something that many people are able to do successfully, as you still stand a lot to lose and not much more to gain. If we hit a peak in the market, it will be too late to sell your property for peak prices, and likely too late to sell it for higher than if you were to list now as well. If you have another property you're looking to purchase, it's also important to remember that you will be purchasing in the same market that you just sold in. Selling at top dollar in a seller's market will mean you will also pay at top dollar for your new property too, and vice versa.Once the virus scare passes and interest rates come back down, which is being widely predicted, many buyers are going to flood back into the market that had previously been holding off, lending towards late spring to early summer being a great time to sell. Good luck and keep us updated on any future deals!