My next move: sell, remortgage, hold, diversify? Advice needed.

[Howard Barrett]

Hey guys. It’s my first time on the bigger pockets forums and I’m looking for some advice on my next investment move. Sorry for the long description but this needs some explaining.

I’m English but moved to Porto in Portugal about 6 years ago and bought my first house with my girlfriend. We paid €160k for a property in the centre of town which has 5 double bedrooms and 2 single rooms, plus a shop at the bottom of the building. We initially house hacked and lived there with tenants but over time Porto became popular with tourists so we bought another small house, moved out, and rented the whole house on airbnb.

Corona virus has meant that airbnb has dried up completely. I’m sure tourism will be back but this experience has just further cemented some things that we already were thinking about.

A - airbnb is a lot of boring work (cleaning, waiting for guests to arrive, etc) and is seasonal.

B - the house we have is only really useful for renting to groups on airbnb or renting as a shared house for students or younger people. The layout and shape of the building don’t really suit much else.

C - houses of that sized have probably increased in price as much as they will whilst smaller houses seem to have more room for growth.

D - Smaller houses are probably more liquid assets than bigger ones.

E - the house is now worth something like €550k but selling fees and capital gains will cost about €110k.

F - having €550k tied up in an asset that has an income of €50k a year before tax (which is quite high here), before expenses and takes quite a lot of work to run, might not be the best use of that money.

So really I want to know what other people would do in this situation. I could remortgage the house and use that money to get into some other smaller properties but that would leave us still owning the original house. We could try to rent that out to a family maybe but as I said it probably not the best use for it.

The other consideration is whether it’s a good time to buy or should I wait and see if prices drop with with economy.

Also, the Porto property increase is caused by tourism. The economy in general isn’t especially strong here. So that is a bit of a worry if tourism is permanently effected then property must drop in value.

There's a lot to consider so I'd love to hear what those of you with more experience think about this.