Which financial metrics to use when deciding to keep or sell a rental
When evaluating each of the rentals in your portfolio (presumably on a yearly basis?), which financial metrics do you use to decide if you should keep or sell a specific property?
For example, do you look at Return on Equity, Return on Invested Capital, etc? If I look at ROE, I might realize the house has appreciated and I can take that equity to get a better return by selling the house and investing in another property elsewhere. (Of course there are sales costs, tax implications, etc).
Thanks!
Hey @John Lubin,
Sounds like you're on the right track. It's really your preference... Personally, I would look at the equity and would let that be my deciding factor. If I had $100K or more of equity in a property and felt that the market could be plateau, I would take the capital and run.
I'm actually in FL also if you want to hop on a call and pow wow about it. Definitely a few more options to consider; like refi-ing and getting your cash out regardless.
More Success,
D
I do think about the return on equity. If I can sell it and use the proceeds for something with a better return, that's what I would do.
Pain in the *** factor ÷ ROI.
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What is your required return on investment?
What is the return on the investment(Cash-flow and Appreciation)
Return of investment > required return. Keep the investment
Return of investment < Required Return and you can find other investments with a better return, sell the investment.
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