No cash flow but great property! Rent or Sell?

[Trevor Toft]

I currently own a town-home in a great neighborhood that I purchased back in 2020. I am looking to start my real estate investing journey and my first thought is to utilize a HELOC on my primary residence, rent it out to start my cash flow and use my equity to purchase a new primary residence. My question: Should I still pursue this strategy if the rental calculations show close to no cash flow? The main reason I am still considering it is because of my extremely low interest rate. Info below:

Original Purchase Price = $340,000  (2024 Zestimate = $430,000)

Interest Rate = 2.25% !!

Estimated Rent (based on neighborhood median) = $2800

Total expenses including HOA, Capex, Property Mgmt, and 50% rule for maintenance = $2750

Cash flow = $50  :(

Do I hold onto this gem or sell it and move onto a new strategy??

[Steve K.]

What part of town is it in? I’d probably hold personally if it’s a long term play. It’ll be hard to beat what you’ve got going out of state. You’re making a lot on appreciation and principle pay down here, and rent appreciation will create more cashflow in a few years for you. I talked to 6 people this week who went out of state for more cash flow and are dealing with negative cash flow now (properties looked good on paper but maintenance, repairs, capex, tenant and PM issues have caused significant losses for them in reality). They’re all looking to sell so if you are looking to go out state, I can hook you up lol. Their properties aren’t nearly as good as what you’ve got though.