Rent or Sell property in view of our own home?

[Donna Peters]

Would you lease it or sell it?

We bought an amazing house in a lovely neighborhood last year, mostly owner-occupied.  We soon discovered the small rental kitty-corner from us had a drug issue.  Shortly, the opportunity literally fell in our lap and we bought it with cash.  We've fixed it up nicely (our own labor) and now it's ready to rent.  I'm procrastinating on pulling the trigger and I'm not sure why.  The financials are tempting both ways. We had decided to lease it because we expect housing values to appreciate significantly in this area over the next decade, and we thought it would be smart to maintain control of the house across the street if it's going to continue to be a rental. 

Details:

Paid $33,000 cash + $6,000 for repairs/new deck/cosmetics 

Rent would be $800/mo.

Value appears to be around $85,000 if selling now

We have very little cash left and our plan has always been to buy houses to rent and/or flip.  We would like to buy more houses now.

Any advise would be appreciated.

[Joe Hines]

Assuming average insurance and taxes (which will be low considering your purchase price) and that you'll self manage, the financials are very good. You could BRRR the property and take a loan to finance your next flip or play the more conservative game that I did and get a stable foundation of several mortgage-free rentals before you take on projects with borrowed money. Search for BRRR here and you will find a wealth of information. You may also want to owner finance with a good down payment.

In any event, congratulations!  You’ve done a good job with this.  You could be in much worse shape than sitting on a debt free property in a good location!