Multi-Family - Keep or Sell?

[Jane Watkins]

Hoping to get some investment advice from this great community!

My partner and I own two properties: an older two-family fixer upper that we renovated and lived in rent free for many years, and a new single-family home that we currently live in now. We financed the new single-family by taking a cash out refi on the two-family so we have a new mortgage of about $5400/month for both properties. The two-family unit is rented out and currently taking care of that entire mortgage/tax/insurance payment.

I'll try to summarize our situation and debt breakdown. The remaining 15yr mortgage (for both properties) totals $440,000 (2.9% with about 12 years to go until we pay it off). On top of that we have $50,000 of a HELOC (unfortunately a variable rate which is currently at about 9%), around $100,000 in credit card debt (0% APR until the end of 2023/beginning of 2024), and about $50,000 in other small loans at 4-5%. So that's 200K in shorter term debt including the HELOC, but all related to the new property.

We wouldn’t be thinking of selling our two-family investment, however, we’re both struggling in our freelance careers right now which has made finances a bit stressful. Our two-family is a great asset, but it’s an old house which might have repairs needed in the near future and the taxes are high. If we’re able to sell it now for what we think it’s worth, (maybe 900K or more ) we could potentially be debt and mortgage free with some money to put in the bank to use on current projects or another investment, which is very tempting. But being that the two-family is paying the mortgage and has the potential to be long term cash flow once the mortgage is paid off in 12 years, we’re obviously hesitant to sell.

Also: Our NOI on the 2 family is about 46K/Year with the possibility of 54K/year if we up rents to market value soon.

We’ve gone back and forth on so many scenarios which is why we’re reaching out for some advice. If we keep the two-family, assuming we continue to have paying tenants, we could always take a mortgage out on our current house to pay off the 200K debt if needed when the ticking clock on that debt is up. Or if we sell now and pay off our mortgage and debt, we could alleviate some stress with extra cash to reinvest, and and look to take out equity out of our single family when the time comes to invest in the next asset, perhaps when rates are better than they currently are.

Are we crazy to sell? Or crazy not to? Any thoughts or advice is greatly appreciated — thank you!