When to Sell or keep?

Question

Hi all!

Reaching out for your experienced opinion on my current conflicting battle on whether to sell or keep.

I purchased my very 1st investment property in Jan 2023- it’s a Mother/daughter. The property was occupied (still is) with 1 tenant that I am now having the exhausting pleasure of evicting. 2yrs later, said tenant continues to try every angle to delay the court granted Marshall’s execution.

The “2nd” floor was poorly renovated (bad contractors), new tenant moved in and a year later, another eviction process has started as they lost their job and refuse to move or pay.

Stuck with a very large mortgage bill (that I am paying), utilities and making small repairs to keep the property up also noting the casual 311 complaints from both tenants. I’m now struggling financially. I don’t see the value with time and effort owning this place but as a new investor, I can’t help but to consider if I hold on to it- if it will then become net positive.

I refi in Oct 2024. Purchase price $525K, appraised for $760k (no major nor significant Reno was had).

NYC eviction process is not for the weak. Unsure with the amount of Reno needed, tenant occupied and evictions in place - if the property will sell as it.

What advice can you provide if any.

Thanking you all in advance.

Jules Aton · Answer

$600 a month wouldn't be enough for me and serial refi costs money, generally loan time also. From your last post I would sell although the bad tenant situation is likely to make the property less desirable. Sorry this is your first experience. Section 8 and multifamily aren't for the faint of heart and can be challenging for novice investors both in managing and reselling. I appreciate your plan to do 1031 and get back into the game. I'd chalk this up as expensive tuition on your RE journey. Best wishes.

Obed Calixte · Answer

You mentioned you are struggling financially - answer a few questions for yourself

- How long can you reasonably afford the property given the current tenancy issues?  Can you afford to wait out the eviction and impending vacancy?

- Do you have reserves or access to capital to make repairs/updates to the property?

- Run your numbers (including all operating costs including property mgmt) based on current rents in AS IS condition and renovated. Does it cashflow as you expect/require?

- As it concerns this property, will you able to make pragmatic decisions based on facts and less on emotion (ie FOMO, worry of evictions etc)?

Those are just some guiding questions. If you find yourself answering "Yes" to most or all, then it may be a fit to keep it, otherwise selling may fit you best.

Taylor Dasch · Answer

The unfortunate question all investors seem to come to at one point or another aha. In my opinion I would sell it if you can make a decent profit on it. But the actual answer is that it depends on the numbers. If you can make $1500 in cash flow on it and investing that money elsewhere would only get you $1000 in cash flow. It would make sense to just do the eviction and keep it. However you can likely make significantly more cash flow (not sure about appreciation) in markets outside of new york.

Liz Potemra · Answer

I think you will have a hard time selling it with the tenants there, meaning you will take significant cut in your sale price.  I'm making two assumptions here - it will take you a year to get the tenants out, and so you are cash flow negative for a year, and that year of negative cash flow is a lot less than the loss in sale price you will need to take to get it sold as-is.  You could put it on the market (and you'll know what that second assumption is), and at the same time do whatever you can to get the tenants out (and know what the first assumption is). Whatever loses you less money will be the answer! Note: I say this also assuming you can afford the negative cash flow, but if you cannot, then get out as soon as you can.  Good luck!

Shunnel Williams · Answer

Thank you for your replies!

1st tenant (that came with the house)- she is a Section 8 tenant and clearly knows the game better than me hence the prolonged delayed Marshall’s execution.

I cannot have 2 Government assistance programs in the property at the same time since it is not a legal 2 family. CO states single dwelling (converting to a 2fam will cost upward of $100k- not an option).

If I hold out- the property will have net profit of $600- possibly more if I refi again to bring my rate down.

If I sell- the equity (assuming it sells with a resulting profit) I have every intention in a 1031 or 1231 deal for another property in the PA, Ohio area

Jordan Ray · Answer

First off, I want to acknowledge how tough this situation is—especially as a first investment property. It sounds like NYC’s eviction process is notoriously difficult, and carrying a large mortgage while dealing with non-paying tenants is draining both financially and emotionally. When deciding whether to sell or hold, I’d suggest framing it through two key lenses:

1. Will this property help you achieve your long-term investment goals?

- If it continues to drain your resources and energy without a clear path to profitability, it may not be the right fit for your portfolio.

- A property should work for you, not the other way around. If it's becoming a financial and operational burden with no strong upside, cutting losses may be the best move.

2. The Opportunity Cost of Holding vs. Selling

- Even if this property eventually turns net positive, at what cost? Could that time, effort, and capital be better deployed elsewhere?

- You have an appraised value of $760K after your refinance last October. Depending on your equity position and market conditions, you might be able to sell and reallocate that capital into a more stable, cash-flowing investment by a 1031 exchange rather than waiting for a turnaround that may never come.

- Sometimes, the best move is letting go of a problem property so you can redeploy funds into an asset that aligns better with your long-term goals.

That said, if selling now would put you in a worse financial position (due to tenant complications or a distressed sale), you may need to stabilize it first. One potential approach could be strategic renovations and a better tenant placement process after the evictions. But if the stress and financial burden are outweighing the potential upside, this might be a great time to cut losses, free up capital, and reset for a more promising opportunity.

At the end of the day, successful investors make decisions not based on sunk costs but on future potential. If this property no longer aligns with your vision, it might be time to move on. Wishing you the best—tough decisions like this are what build true investing experience!

Mohammed Rahman · Answer

Hey @Shunnel Williams - so sorry to hear about your scenario.

I've dealt with this exact same situation, and ontop of everything I was dealing with the Section 8 housing authority because my tenant was a voucher holder.

There is a light at the end of the tunnel, be strong... and then maybe call your local councilperson to tell them about the horrible situation you're in. There are a few local bills being introduced to give mom-pop homeowners more strength in dealing with evictions.

In terms of buying vs. selling - it really depends on your situation and what your goals are.

Will there be people willing to buy your property as-is, even with the tenants? Yup, but the tradeoff is they're not going to give you the market price since they're taking on a big risk.

Happy to give my $0.02 and give you a realistic valuation of the property based on market comps, reach out any time via DM or just text at the number in the signature of my post.

Abel Curiel · Answer

Hello @Shunnel Williams,

Sorry to hear of the challenges on your first deal. As stated by one of the respondents, this is a valuable experience for future investments. Very few successful investors get by without experiencing their fair share of bad tenants/evictions.

Selling tenant-occupied properties with uncooperative tenants is challenging in NY. The properties that sit on the market the longest are luxury, ultra-luxury, or tenant-occupied. The good news is that there are plenty of investors who would be interested in the property as-is and even more investors interested if:

- The property is in an area they are familiar with- The property is in a desirable area- You are deep into the eviction process (it seems as though you are)- You can deliver 1 unit/floor vacant (this could happen before closing)That said, if you can keep it, I'd say do it. NYC property values are increasing at or above the national average (4%). If you can get through this rough patch and the #s work, you could see your property's value double from the original purchase price in a few years.Lastly, I'd check out the Sell vs. Keep calculator.All the best!

Abel

Adrian Lammersdorf-Scioll · Answer

I say try selling it, and at the same time get someone else in there.  Whichever comes first and makes sense, go with that.  It may sell at a loss if someone else knows that you are trying to get rid of it because of a bad tenancy, but if you can get a well qualified tenant in there, then it may be worth keeping at this point if you can make it get some decent cash flow.

Maybe see about getting it turned into a section 8 and showing the tenant how to do that so you can get guaranteed rent from government if its a possibility?

If you can get some good money for it, then sell, and look at some more landlord friendly states to avoid the hassle of that in the future.

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