Should I keep this rental or re-invest in quadplex.

[Jeff Gardner]

Wondering if there were any mentors who could examine my numbers on a rental house that I own.

I own it outright. Zero liens.

Rent: $1553 per month autodeposited
Taxes: $8200 per year
Management: 10%
Expenses: $3600 (water bill, repairs)
Insurance: $50 per month

We've had a major "repair" event each year so that's why the expenses are super high.  This year was a water leak in the basement.  

The cashflow is not that high and the area doesn't appreciate appreciation. I could sell it for $220,000 right now which is the same 5 years ago.  

Would you take that cash to a better cashflowing property?

[Account Closed]

Originally posted by @Joe Villeneuve:

Originally posted by @Account Closed:

Originally posted by @Jeff Gardner:

Wondering if there were any mentors who could examine my numbers on a rental house that I own.

I own it outright. Zero liens.

Rent: $1553 per month autodeposited
Taxes: $8200 per year
Management: 10%
Expenses: $3600 (water bill, repairs)
Insurance: $50 per month

We've had a major "repair" event each year so that's why the expenses are super high.  This year was a water leak in the basement.  

The cashflow is not that high and the area doesn't appreciate appreciation. I could sell it for $220,000 right now which is the same 5 years ago.  

Would you take that cash to a better cashflowing property?

Figure 10% sales costs if you use a real estate agent and typical escrow and title. So with a $220,000 sales price you'd probably net $200,000. That would be a loss if you bought for $220,000. I'd run the numbers before I'd sell.

No it isn't...a loss that is. This property has no liens on it now, but it was never stated if it was originally bought with all cash...or with a DP. The cost to the REI isn't the contract price...it's is ONLY what the REI paid out of pocket. In this case, assuming there was a DP, that cost to the REI would be the sum of that DP, plus any months there was a negative CF. As long as there was positive CF, the tenant's rent was making any and ALL payments that month...this includes the mortgage. Subtract that total from the "after closing cost" sale of $220k, and that would be the profit.

Assuming the property was foolishly (sorry) bought all cash (see above why), and the property continues to have negative CF (adding cost to the REI...see above), the cost to the REI only increases...as does the accumulative loss. Recognize this is something that will never be recovered, and only increased (the losses that is), it's time time cut these losses, take the "after C.C." profit, and put it into the next property where you CAN recover these losses..along with new gains.

Sure there would be loss. He has transactions costs from the purchase and from the sale. That is money he once had in his pocket but now doesn't. Even if he paid cash he has title, escrow, inspection, appraisal, for buying and realtor fees, title, escrow for selling not to mention property taxes and any capital gains. If it leaves my pocket and doesn't come back, to me that's a loss.