Refinance or Sell

[James M.]

As an "accidental landlord" from a home I purchased in 2005 and started in renting in 2011, I've been carrying a negative cash flow property for five years. It was my "starter home" and is now one of three rentals, with the others profiting an average of $350 per month (after expenses).

So now, with home appreciation back to 80/20 LTV, I have the opportunity to refinance the property. On a new 30-year loan, with a relatively decent interest rate, after expenses, I will profit about $15 per month. I'm still thinking about selling and being totally done with it, but I am wondering if there is some advantage I need to better consider.

In a perfect world, the property will continue to appreciate. I could eventually cut out my property manager, and gain about $100 more cash flow per month, but I am not at that point now. 

Any reasons I should choose to refinance instead of sell? Thanks!

[Nikolas Buchholtz]

First of all if you have the oppourtunity to refinance and make money off the process why not? At the end of the day you'll have a paid off cash flowing asset, also remember economies of scale comes into play and as soon as one of your three rentals is paid off you can use the extra money that you're making to pay off the second and third! Also the way I see it if you can have a pretty passive asset make you 15 dollars a month with a property manager in place why not? That's 180 dollars a year x30 years and that's about 5500 you've made extra, now to some that may be chump change but money is money, and if you can gain 5500 dollars and have a positive cash flowing asset, and at the end of the day own one out right why wouldn't you? The way I view it is its a pain in the *** to purchase a property, find a good deal, etc... unless all of the money you would make selling the property is reinvested into 2 or 3 more properties I would not sell. Also money in your pocket is money that will be spent! Now with that being said I'm no expert, but that is the way I view it and if you can get by with it I would ride it out. All of those factors were mentioned didn't include appreciation, depending where you are that sale could kick off a nice retirement. Just my personal view point! Good luck and let us know what you decided.