Sell or not to sell long term rental??

Question

I’m in San Antonio, TX and happened to buy a single family home in an area that has boomed exponentially. With the current housing shortage, I never thought I’d say this, but im actually considering selling the home, according to some of the online Real estate listing companies my house is worth about 220k.. I bought it 4 years ago at 175k. I currently owe about 152k 🤔

what’re your thoughts?
I was planning on building some more equity and re-financing next year

what’re your thoughts? I was planning on building some more equity and re-financing next year

Jaron Walling · Answer

What's the cash-flow? What's the COC? What are the numbers telling you? This should be a decision based on numbers and facts.

Joseph Cacciapaglia · Answer

This is an amazing time to be a seller here in San Antonio (and lots of other areas too). However, it's a tough time to try to redeploy that income into a new traditional rental. What would your strategy be with the capital? A lot of my clients are shifting their dollars to short-term rentals, land for construction, and 5+ multifamily. There still seems to be a decent amount of value to be had in those types of deals today.

Evan Tom · Answer

I would only sell if you could redeploy and earn higher ROI/COC

Enrique Donnell · Answer

@Ivan Chavez I am in the same situation here in San Antonio with our 1st rental bought in 2018 for 112k and now we can sell for around 180k. I would like to follow your thread and see what others have to say.

Curtis Mears · Answer

@Ivan Chavez

I am in a similar situation. One of my questions I ask myself is what would I do with the money? Can I invest it somewhere else and earn better returns? I am not sure what I am going to do. I may hedge my bet and sell 1 or 2 but keep the rest.

David Mares · Answer

I have clients and family in the same boat - many of them bought these properties as their primary home in the early 2000s around $95-110K and could easily make a killing in today's market -  and it sure is tempting. The overall mindset is that a sure thing cash flowing nice and with good tenants is better than nothing and if they were to sell they would rather have the next deal already lined up rather than let the money burn a hole in their pocket. But to each their own - this market sure is HOT @Ivan Chavez

Ivan Chavez · Answer

Thanks Evan, glad I posted on here, lots of informative response I got..

for the time being, I may just hold on for longer

Ivan Chavez · Answer

Very very good points, I appreciate that

Ivan Chavez · Answer

I’m of the same mentality, I love the cash flow it’s brought and the quality of tenants has been phenomenal, I’ve been blessed thus far, but the thought of how much I can sell it for and instantly have more cash in hand has made it soo enticing! Haha

will definitely be looking more into the 1031!

Scott M. · Answer

There is no doubt it is a red hot market these days and inventory is low for a variety of reasons making it a sellers market.  I think what Jared said is important, but the numbers and facts need to back up your goals and objectives.  I have a client that has a number of homes in our local area.  He also works with several different property managers.  Over the years he has said he wanted to consolidate them all with us but never has.  Yesterday he called and said one if his managers who has 10 of his properties is pressuring him to sell all of his properties because the market is so hot he could really get a great price.  Problem is, he doesn't want to sell.  Houses are performing, he made it through COVID so far with no real issues except with 1 house.  His goals and objectives are the long term cash flow VS the capital gains he can make by selling today.  Maybe he can sell for more in the future, maybe this is the peak of the market?  No one knows, but what I know in talking with him for 5 minutes is he doesn't want to sell because the cash flow is more important today to him.  Doesn't matter what I think or the other manager thinks.  In fact, the other managers thinking is costing him 10 homes!

So, you may make more money if you sell, you make make more money if you hold for year but what do you think is going to happen with the market?  Will it grow, will it shrink?  Will the current local/state and federal policies (and policy makers) likely to make the home stay the same in value, grow, shrink etc?

As for 1031's I am far from an expert but I would say to look into the Biden tax proposal as they are proposing changes.  I have no idea what the truth is around those proposed changes.  But good to look into it so you know the facts.

Sell or not to sell long term rental??

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