Would you choice A or choice B?

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B...No questions. Option B keeps you in the game. It's like Poker, the main rule to success in the game, is to stay in the game. No matter how many hands you lose, you haven't lost any money unless you run out of money, hence...stay in the game. The money you put in the pot for every hand you lost, is just in a different pile on the table. You haven't lost it yet.REI is much like Poker in that way. Staying with a bad hand, throwing more chips in hoping the next cards you get will turn things around, is not a good strategy...and will get you closer to being out of the game. Throwing good money at at negative cash flow is the same thing. Get out, move forward with what you get out with, recover what was negative with gains on the next property. The faster you get out, the more you have to move forward with...and the faster you will recover the negative cash flow.

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@Joe Villeneuve agree 100%. I wouldn't do it. There are people who do. There are a number of active members here who have done very well in expensive low cash flow areas. Who am I to argue with success? I will however continue to point out the risks of such a strategy. Increases in value when properly leveraged can (certainly not will) far outstrip the returns from cash flow. It can also cover negative cash flow. Certain rare areas of the country can count on above average appreciation. San Francisco is a high demand high income area, but it is limited in size. It is not getting any bigger so it is reasonable to predict higher than normal appreciation over time. Trust me, we agree a lot more than we disagree.

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@Jason J. I'm with @Ned Carey, the answer isn't as clear cut as we'd all like it to be. If investing is buying a series of future cash flows and those cash flows can be big or small (Monthly rent or property sale) and positive or negative, then holding onto the property means you think the big cash flow from selling will make up for all of the small negative ones, knowing that to get to the big cash flow you MUST make all the small negative ones . The decision hinges on the size and duration of the negative cash flow, the size of the final payout, and your ability to make up any cashflow shortfalls. It depends on a host of factors like, -Will rent in your area go down?-What condition is the house and do you have any known CapEx repairs coming up?Is the property three years old or built when Kennedy was in office and needs a new roof any moment?-What is you tenant base's likelihood of trashing the place upon turnover and how long do they usually stay?

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Normally I agree with @Joe Villeneuve. But you didn't say what size your pile of chips is. If you can easily afford the negative cash flow, that is a different situation than if a few months negative or one large repair is going to cost you the house. If you are in the bay area that is one of the few places in the country where keeping may make sense. The key word there is May, I have no idea. And if you can't afford the negative cash flow it is high risk to keep it even if it a great longer term play.

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@Jason J. I could get you a buyer by Monday! dianaluvscal@hotmail.c

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I would've said option A but you haven't lived in the duplex long enough to sell tax free. I agree with @Dennis M. to go for a 1031 exchange and find a better cash flowing property. You could find a 3rd party intermediary, locate property(s), and get something under contract the day you sell.

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Definatly B. This is a major negative cash flow property long term compounded by the higher risk and cost of welfare tenants. If markets drop a SFH will be hit with a loss that will last a considerable time. You are looking at a double negative that I would not have gotten into and would definatly advise dumping asap.

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Except, that no matter how high your chip pile is, the cost to you for each chip you "throw in", or negative CF you have to cover, equals the same. Just because you have more to lose, doesn't mean it gives you a longer timeline to lose money. The longer you stay in, losing, the more you have to recover and break even, before you start to turn a profit. Having a higher pile of chips should mean you are able to participate in more "deals" (cards and/or houses)...not more into each deal.

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@Jason J. I would do plan C Dump it now while the prices are high then 1031 exchange that into out of state multifamily apartment buildings where you can actually make some good money each money . You wait around long enough that 400k house will be more lIke 300k and you’ll be scratching your head wondering why you held it

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@Amy Beth as mentioned above, it's not negative. More or less flat. I clearly didn't intend for it to be a dud. I calculated higher rents for a 4 bedroom but because the square footage was low, my numbers didn't pan out. We all make mistakes. Live and Learn.