Rental with No Cash flow

[Mark Schwab]

I have a rental property in Riverview which i bought during the "boom Years" and I have owned it for 14 years. It is not cash flowing as it has an adjustable rate loan which has been going up again after being at historical lows for some years (it went down to a low of 3% but is now up to 5.75%) I am trying to decide whether to refinance it to stabilize the payment or just sell. I think with a new loan i can get it to cash flow about $350/mo. If I sell and do a 1031 exchange, I will have about $50K to work with. Any thoughts? Refinancing will cost me about $5K

[Theresa Harris]

Can you find a place that works with the money you have that will cash flow better than $350/month? If so, sell it and buy a place with better numbers.  You've had it for 14 years, so when looking at the numbers the house should have increased in value and you will have paid off a good amount of your mortgage.  

[Mark Schwab]

My house is only just now approaching what I paid for it (it had lost a lot of value in the crash).Also, It was a Neg Am loan and I actually owed more than I had borrowed on it for a few years. I now have paid the loan down by about $34k. But you are right-the question is can I find a better return somewhere else?

[Rebecca Graziano]

I agree with the others. Follow the math- if you sell and take your $50k (is this after taxes?) will you get the same return? What would you do with it? Maybe talk to some local lenders and see what your numbers look like with a refinance. 

[Mark Schwab]

As I mentioned a sale would be a 1031 exchange so taxes aren’t in the equation- I think I should have rephrased the question as I understand the issue is can I do better with another investment (in another property). I guess I was really hoping to get some ideas for doing just that. Also, the 15 year mortgage idea would eat up all of my cash flow and while that will pay down the loan quickly, I prefer the cash flow at this stage. Thanks for everyone’s input tho.

[Marci Stein]

has it ever cash flowed ? 

I don’t see the point in holding onto 

something if it doesn’t . 

[Mark Schwab]

It hasn’t cash flowed but with the pay down of the loan, and the increase in rents, it will if I refinance. It works out to about an 11% return cash on cash (on my $50k net I would get upon a sale) in that scenario. I know others are getting much better than than, but the question is how realistic is it to expect better returns, without being invested in a bad area of some city (I have a pretty nice home there in a nice neighborhood). And Tampa keeps showing up on lists of best places to invest, inspite of my bad choice (I will own my decision-i can’t call it “bad luck” ) in buying there during the red hot boom of the mid 2000’s.