When Should You Sell a Rental Property?

[Drew Karlberg]

I purchased a studio condo in 2013 for 110K in Philadelphia (Fairmount 19130). I refinanced to a 3.25% 15 yr mortgage in 2014. Due to life, I moved out January 2016 and I'm currently renting it out. The monthly rent is $1149. It pretty much covers the mortgage, HOA fee, insurance and taxes. However, it delivers no cash flow and my only return is the equity when I sell. How long should I hold? Is there a general rule of thumb? In 12 years, the loan will be paid off which would result in a significant monthly cash flow. But should I sell now before the next crash? How do I judge the carrying risk? I know the answer varies and depends on the numerous factors so let me know if I can provide any more info. Just wondering if there are any general rules of thumbs out there.

[Greg Scott]

I have not seen any "rule of thumb" related to this because people will approach the problem differently. I focus mostly on long-term cash flow and in under that lens this property is giving you zero return.  

If you want to hold the property, I would look at moving to a 30 year mortgage so you can get at least a small amount of cash flow.  Otherwise, I would sell and plow the proceeds into something that has a return.