Request for Advise HOLD or SELL

[Ravi S.]

I own a SFH.
Bought it in 2009 at 385K + 50K in rehab = 435K
Current Market Value 785K
Current NOI = 32K Annual = 7.7 % Cap Rate on my investment, 4 % Cap Rate at current market prices

should I continue holding it or sell it or other ideas?
I am open to ideas.

[Joe Villeneuve]

Originally posted by @Account Closed:

Originally posted by @Joe Villeneuve:

Originally posted by @Ravi S.:

@Joe Villeneuve 435 into it

Sell it!!!!...and never buy all cash ever again. I don't think you realize how much money you lost over the last 12 years. Keep in mind, the total cost of a deal isn't, and never should be, what a deal costs the REI. The total cost includes mortgage pmts, taxes, insurance, ...etc... Your (the REI) cost is ONLY what comes out of your pocket (as long as you have positive CF). When you pay all cash, you paid full price for that deal, you established a much higher number you have to recover before you make any profits (you have to recover all of your cost before you start making a profit) with less funds to use to recover your cost, and dramatically reduced your total CF and total Property Value.

 Don't forget to mention lost opportunity costs.

 OK.

Right now, that $785k in cash is buying $785k in Property Value...and $32k in Cash flow (NOI - no debt = Cash flow). If you sold it, that same $785k (minus closing costs ~= $600k) could buy you $2.4M (25% DP...assuming this is a commercial property) and at least and additional 2.5 times the current CF (new CF = $110k).

If you were to REFI, your current CF goes down (16k), you walk away from closing with about $400k in cash, which buys you an additional $1.6M in PV, and about $40k more in CF (new cf ~= $56k)