Evaluating Sale Vs. Rent

[Josh Raymond]

Hello BP Community,

How do you evaluate selling a property that has appreciated 6 figures vs. keeping it as a rental? 

Purchased a place to live in 2014 297K, could sell for $415,000 in todays market within a month. This was just riding a market wave (Denver) it was our first home purchase didn't even know what house hacking was but we rented out a bedroom for the first couple years then have just been enjoying since. 

My dilemma is I still like the idea of long term rentals in Denver and the appreciation aspect but looking at just COC and CAP rate if I purchased today the returns are awful.

I would net $150 a month because I would manage. The home is a new build so not huge capex for a while. Pay down $500 a month of mortgage. And of course any potential appreciation. 

The tax free gain is what makes me want to sell but I also want to grow in R.E. and selling feels like I am going the opposite direction. 

Anyone else in this situation? I also personally am struggling to find other deals. I have a paid off small condo I want to 1031 to something bigger and cash for another down payment here in the Denver market. 

I am actively making offers. 

Goals: 

Grow overall portfolio. Have a cash flow portfolio, I have long term stock investment for retirement, I want to grow another income stream with R.E. well ahead of 60 (I am 30). 

Thanks! 

Josh

[Jaron Walling]

@Josh Raymond Hey Josh! You're in a great situation but don't bank on appreciation forever. If you ran the numbers and factored the expenses correctly $150 per month doesn't move the needle for me. 

Take advantage of your market. Denver has been skyrocketing for years. Sell near the top. Buy near the bottom. You can't predict the future but a lot of smart people saying 2021 could be the year. If you don't sell maybe you can cash-out ReFi? That would unlock some future buying power. If not I'd sell your place, stock pile cash, and make sacrifices until you find the next DEAL. Is that this year or two years from today? Who knows but we can both agree cash is king when markets crash.