Keep or Sell?

[Jerry Callow]

Cross posting as I cannot edit the post in the other forum

I'm relatively new here and have ventured into real estate investment over the last two years with two single-family homes (SFH). Here's a brief overview of my current situation:

• SFH1
  • Acquisition Price: $1.6M
  • Current Market Value: $1.89M
  • Loan Balance: $1.2M
  • Interest Rate: 3.75%
  • Annual Net Cash Flow: -$12K
• SFH2
  • Acquisition Price: $2.15M
  • Current Market Value: $2.2M
  • Loan Balance: $1.5M
  • Interest Rate: 7.75% (I'm considering refinancing in the next few years)
  • Annual Net Cash Flow: -$65K

Despite being proactive in educating myself through BP forums and real estate literature, I'm beginning to question the sustainability of enduring annual losses from these investments. I'm reaching out for guidance on a few points:

1. Long-term Strategy: With the current losses, I'm evaluating whether I should hold onto these properties for the next five years or consider selling them. I'm concerned about the potential costs associated with selling. What factors should I consider in making this decision?
2. Upcoming Family Commitment: In two years, I'm planning to purchase a family home for around $1M. Would it be advisable to sell one of the investment properties to finance this, or should I explore using a Home Equity Line of Credit (HELOC)? Are there alternative strategies to leverage my current investments for this purchase?
3. Investment Reallocation: Given the negative cash flow from these properties, would it be wise to sell both and reinvest in markets outside of my current state, where positive cash flow is more achievable?

I appreciate any insights or personal experiences you can share. Your advice will be invaluable in helping me navigate these decisions.

Thank you in advance for your support.