Low cash flow OR selling in hot market

[Mike Bend]

Hello! First port here....My goal is to ultimately have a portfolio of rentals. I can’t decide if I should sell my townhouse for about 50-60K profit in this hot market and use that to find a better deal that cash flows better or if I should keep the townhouse but make conservatively about 50-100$ a month in cash flow.

I owe 169K on my mortgage with 2.8% interest. The house appraises for about 230, and other models around me have been selling quick around that 230K price. I live in Chicago suburbs so the high property tax and HOA on my townhouse are the cash flow killer. Rentals in my area for these 2 bed 2 bath townhouse are about 1700-1900$ per month.

Sorry if this post was too vague to answer. I can add more details if need be.

Thanks for any input

[Joe Splitrock]

@Mike Bend condos and townhouses are the first to lose value in a down turn and last to recover value in a hot market. Condos and townhouses have all the scale disadvantages of single family homes and have the multifamily disadvantage of sharing walls with other people. I am not a fan of HOA, because of restrictions they can place on your business and the added expense.

The challenges in IL are you have to deal with anti-landlord politicians, high taxes and poor handling of key issues like crime and COVID. This is why Illinois is one of the few states that lost population in 2020. It is one of only a few states states that lost enough population to lose seats in Congress. Taxes are only increasing in the future as higher wage earners leave to erode the tax base.

Of course the most important question is if you sell, where will you invest the money. Selling only makes sense if you have a better investment to move into. I am sure you can do better, just make sure you have a plan before you sell.