Keep or Sell Condo Rental

[Justin Wo]

I’m looking for some other’s perspective on whether I should keep or sell my condo rental.

I bought a one-bedroom condo at the peak of the market back in 2006 for $276K in northern VA (Loudoun County). I lived in it for a few years, then moved, but since the market tanked, I had to become a landlord. It wasn't until last year that the value finally surpassed what I paid in 2006 with recent sales at record highs of $315K. My current tenants have been great and have been there for over 7 years. I have slowly increased rent, but not kept up with market rate. I'm still coming out of pocket $115 per month to cover the mortgage and condo fee, not including extra maintenance and issues down the line. Market rate rent would be ~$130 positive cash flow per month.

I am debating whether to hold onto the condo or sell now that I can sell for more than I originally paid. I have around $180K in equity. My two thoughts are:

-Sell and put the proceeds in index funds to invest. I’d no longer have to worry about unforeseen issues or dealing with potential bad future tenants.

-Keep the condo and look forward to it being paid off in 13 years and just having mostly passive rental cash flow coming in. It could supplement retirement, although we are forecasting to be well off without the condo income. The downside is the condo fee continues to rise every year and I’m sure there will be maintenance headaches in the future. I already had to replace the HVAC and hot water heater a few years ago.

With interest rates and real estate prices so high, I don’t see it making sense to buy another rental property at this time and honestly, not sure I would want to.

I appreciate any input. I’m leaning towards selling, but want to see if there are reasons I should keep it that I’m not thinking about.

[Brandon Wagner]

My Take, Real estate in the current market environment is only favorable to stock investing when using leverage.  If you have a lot of equity in your condo, and not cash flowing, chances are you'd be much better selling and investing into the financial markets.  The best benefit of real estate is the appreciation, and your condo doesn't sound like it's doing super well in that regard.  

Most likely everyone on this site will recommend RE investing, because that's what we're all here for.  From your reply it sounds like you're over it and the hassle isn't worth it to you anymore.  I wouldn't overthink it. Sell the place and simplify your life.  Cash in the 8%+ returns in the stock market.