Analyzing my own house to see if I should sell or stay

[Kevin Bieber]

Hey guys-

I have been running some numbers on my current house to help decide whether I want to move out into a fix and flip while renting my current house or if i want to sell the house and move into a fix and flip.

It's currently located in Tempe, Arziona about 2 miles away from ASU.

Here are the numbers (used the excel spreadsheet at the top of this forum- Great resource!)

House value: $204,000

Mortgage: $187,000

Effective Rent Income: $16,530 (5% vacancy)

Operating Expenses: $5,350

NOI: $11,180

Cash Flow: $-1,924

Cap Rate: 5%

After running the numbers above, I will have a negative cash flow of roughly $1924 which is a huge red flag for me (though i was conservative with repairs and vacancy numbers). The only thing that i could think would cause me to stay, is the house value appreciating in the next few years. It seems things have been rising somewhat quickly in the last year. I am thinking even if i had a loss of $1924 and the house value went up 5%, I would have a gain of $10,200 (.05*204,000+204,000). After the negative cash flow i have actually made $8276 for the year. So i invested 1924 (assuming no major problems) and receive a return of $8600 on it if the market continues to rise. One other key item is that i have a full time job and if needed i could pay the extra expenses.

Even all that being said, my gut is telling me I'd be much better off with a house that cash flows. In addition if i were to sell this and buy in the next few months, I would see similar appreciation in my next house and hopefully get a better initial deal.

Any other feedback is appreciated. This is my first time running through this so i am sure i am missing something.