Sell or Not to Sell STR

[Ariel Gomes]

Hello BP friends,

I am debating if it's worth to sell my STR in Fort Lauderdale. While I enjoy managing the property and I have a great team in place to clean and maintain the place I am thinking of taking some time off oversees. I purchased the home in 2020 and I have about $800k in equity. I do have boots on the ground and can possibly get by with assistance of a cohost instead of a full property manager for about 10% - 15% fee. There is is also the option to rent it log term for about $10k-12k/month(hesitant with this option as it would make a sale more difficult but open to it).

That cash in addition with my stocks investment portfolio would allow me with a comfortable retirement overseas (Brazil). I am 40 but starting to get getting burned out with my corporate job.

South Florida property appreciation is slowing down but the fundamentals of the economy seems to still be going strong and forecast projections are positive for the next 5 years.

Would you sell to tap on the equity and move on?

Do you think financially it makes sense to continue to hold the property take advantage of appreciation, tax benefits and the cash flow?

2020 Built 5 bed/ 3.5 bath + 2bed/1bath ADU

Loan Balance: $624k

Purchase Price: $725K

Estimated value: $1,450,000

Gross Annual Income: $ 147k in 2023/ projected to make $165k in 2024(possibly more)

Annual Expenses: $92k Including mortgage, cap ex., cleaning and operating expenses

Monthly cash flow: $6,083 self managing

Monthly cash flow: $4,300 with cohost

ROE: 6.4%

Thanks for your input!

[Luis Blanco]

@Ariel Gomes 

I think it could absolutely make sense to continue to hold the property and take advantage of the 4 ways you are currently building wealth: cash flow, appreciation, tax benefits, and amortization. That being said, it really has to do with you and your goals. Sounds like you are burnt out of working your corporate job and would like to "sell the farm" and move on. I completely understand where you're coming from, and I know that you're not alone with feeling burnout and thoughts of a comfortable retirement. 

There are reasons why I would sell to tap on the equity, which include trading up via 1031 exchange. I think you could potentially either keep your current asset, set up systems to make it as passive as possible, and possibly hire a co-host like you mentioned or property management. You could 1031 exchange the STR into a much more passive investment property, like something turnkey, or already under management. You could also just sell, take advantage of the appreciation and go retire in Brazil, but I would speak with a CPA and attorney before making any hasty decision to leverage their expertise. This way, you can more clearly see how this decision will affect you both in the short term and long term. Anyway, I hope that I have added value in some way. Also, I wish you the best with whatever road you choose!

Best wishes, Luis