To keep renting or sell

[Anthony Reyes]

I have a property that I have been renting out for about 6 years. The mortgage is $830 a month and I rent it our for $1850 per month. There is about 250k in equity. I am having to evict the current tenant for non payments for the past 3 months and my property management company is merging with a different one because of health reasons of my current one. Do you all think it would be wise to keep renting with the healthy profit or sell and wait to see what the real estate market does? Im leaning towards keeping it rented because of the low mortgage. Just wanted any other insight. 

[Ray Hage]

Quote from @Anthony Reyes:

I have a property that I have been renting out for about 6 years. The mortgage is $830 a month and I rent it our for $1850 per month. There is about 250k in equity. I am having to evict the current tenant for non payments for the past 3 months and my property management company is merging with a different one because of health reasons of my current one. Do you all think it would be wise to keep renting with the healthy profit or sell and wait to see what the real estate market does? Im leaning towards keeping it rented because of the low mortgage. Just wanted any other insight. 

Unless you can make a really crazy profit on it, it is worth continuing to hold long term even though you are having a bit of trouble at the moment due to tenant not paying and PM change. If you are looking to buy more properties, you could take out a loan against it vs just selling it. You have a good cashflow so no reason to sell it unless you have some kind of great opportunity you need the money for. 

[Brayden Hrycko]

Hello @Anthony Reyes!

It sounds like you are ready for a change. You have some good cash flow but you do have some dead equity there that you may want to tap into. I would start by figuring out what where you want to take your investing journey. Talk to some lenders/realtors in the area and look into the numbers to see whether it makes more sense for you to upgrade that property or just tap into the equity. 

[Thomas Korbos]

If I were in your position, I would personally take an equity loan out of the property and use it towards an investment property that needs some rehab work done, to expand my portfolio and bring in more cash flow. 

[Scott E.]

You didn't specify your cash flow number. But I'll estimate.

$1,850 gross rent

-$830 mortgage

-$150 property management

-$100 misc utilities/maintenance/etc

-$100 repairs/capex/reserve fund

=$670 per month cash flow

Obviously this is VERY rough math with a lot of assumptions. But if your cash flow is $670 per month, that is $8,040 per year. And if you're making $8,040 per year with $250k in equity, you are currently getting a 3.2% return on equity. Not good.

Seems like a good plan to either tap into your equity with a HELOC, or sell and move the money into something that will return something more in the 8-12% range.

[Dustin Lauer]

if the rate is low and you think the area will continue to appreciate, then might as well keep it.  To me selling / refinancing only makes sense if you have something better to do with the cash out.  Best of luck !