Selling or keeping?

[Yesenia Martinez]

Hi there 

I own a SFH in Odessa Texas, purchased with own cash. After purchased and rehhabed total invested $213k

The current ARV is $225k I decided to rent the property long term rental contract for 1 year, it will be expire next August 2025, current rent is $2,250 minus expenses, cash flow is $1,600 each month.

I am considering whether asking  the bank for a loan over the property to use this capital to buy another fix -flip property   Or to sell the property,  ( maybe  wholesaling because closings costs would be expensive leaving no profit left)  

I am here to read your ideas on this. Thanks in advance! 

[Jasper K Juhl]

Hey @Yesenia Martinez

Great job on the investment in Odessa! You've clearly put a lot of thought into the property and your next move. I’m in Austin, and while I’ve got interests all over the country, the Texas market is close to my heart.

From the numbers, it seems like you're sitting on a solid cash-flowing asset. Renting it out at $2,250 and bringing in $1,600 monthly after expenses is a nice return. The fact that you bought it with cash gives you a lot of flexibility, which is key in a market like Odessa where real estate values can sometimes be unpredictable.

Let’s break it down:

1. Refinance and Reinvest:
   • The rental market is treating you well, and if you pull out equity with a loan, you'll still have that income stream. The rent should comfortably cover the mortgage payments, especially with interest rates potentially stabilizing soon. This move would allow you to keep that long-term asset while using the equity to grow your portfolio—maybe even in a neighboring market.
2. Selling (or Wholesaling):
   • If you decide to sell, keep in mind that closing costs, real estate fees, and possible taxes could eat into your potential profit. It sounds like wholesaling could be appealing due to avoiding some of those costs, but the margin is slim between your total investment and the ARV. Wholesaling might work if you find the right buyer who sees the long-term rental potential, but you're not likely to see significant gains quickly with the numbers you've shared.

Given that you're cash-flowing well and have a stable tenant through August 2025, holding the property while pulling out equity to pursue other deals sounds like a strong move. Plus, with Texas continuing to grow, Odessa could see gradual appreciation over time.

P.S. Did you know Odessa has been one of the top-performing rental markets in the U.S. for mid-sized cities due to its oil industry? Even with fluctuations, long-term investors often see strong returns. 

Good luck with your decision, and feel free to bounce more ideas off me!

[Yesenia Martinez]

Quote from @Jasper K Juhl:

Hey @Yesenia Martinez

Great job on the investment in Odessa! You've clearly put a lot of thought into the property and your next move. I’m in Austin, and while I’ve got interests all over the country, the Texas market is close to my heart.

From the numbers, it seems like you're sitting on a solid cash-flowing asset. Renting it out at $2,250 and bringing in $1,600 monthly after expenses is a nice return. The fact that you bought it with cash gives you a lot of flexibility, which is key in a market like Odessa where real estate values can sometimes be unpredictable.

Let’s break it down:

1. Refinance and Reinvest:
   • The rental market is treating you well, and if you pull out equity with a loan, you'll still have that income stream. The rent should comfortably cover the mortgage payments, especially with interest rates potentially stabilizing soon. This move would allow you to keep that long-term asset while using the equity to grow your portfolio—maybe even in a neighboring market.
2. Selling (or Wholesaling):
   • If you decide to sell, keep in mind that closing costs, real estate fees, and possible taxes could eat into your potential profit. It sounds like wholesaling could be appealing due to avoiding some of those costs, but the margin is slim between your total investment and the ARV. Wholesaling might work if you find the right buyer who sees the long-term rental potential, but you're not likely to see significant gains quickly with the numbers you've shared.

Given that you're cash-flowing well and have a stable tenant through August 2025, holding the property while pulling out equity to pursue other deals sounds like a strong move. Plus, with Texas continuing to grow, Odessa could see gradual appreciation over time.

P.S. Did you know Odessa has been one of the top-performing rental markets in the U.S. for mid-sized cities due to its oil industry? Even with fluctuations, long-term investors often see strong returns. 

Good luck with your decision, and feel free to bounce more ideas off me!

 I really appreciate your response, vas very very helpful. Thank You. I am actually going to analyze the idea of mid term rental and long term both strategies, in same area and surrondings.  Thank you. 

[Jonathan Bock]

I like to have lines of credit for optionality and many of these are IO  

[Jeff Roth]

Great question Yesenia-

You have a house you bought well and fixed up and rented with equity. You also have strong positive cashflow every month and want to move on to the next project.

Personally, I think you are better off keeping the house and doing a cash-out refinance to get the money for the next project rather than selling the house. Look into a DSCR loan that uses the property's cashflow instead of your personal income to qualify.

This is a tax free move as you are using debt plus you still benefit from all the benefits of still owning the first house.

Your future self will thank you for stacking houses this way as your cashflow and equity will build up over time creating long-term wealth.

To Your Success!

[Alecia Loveless]

@Yesenia Martinez If I had one unit that was cash flowing $1600/month I would hold that property for the long term.

If possible and you so desire I would consider pulling out a portion of the equity to do another deal.

If you don’t want to refinance you’re sitting on a very strong amount of cash flow. My 31 units average about $285/unit/month so kudos to you on your $1600.

[Yesenia Martinez]

Hi Alecia!,  well I get that high cash flow because I purchased using cash. I could have been making more $$ actually by using all the cash sitting" on this proeperty,    Lets see once i refinance it how it cash flows after mortgage payments..         Youre doing very stable and good!! congrats!!! 

[Jay Hurst]

Quote from @Yesenia Martinez:

Hi there 

I own a SFH in Odessa Texas, purchased with own cash. After purchased and rehhabed total invested $213k

The current ARV is $225k I decided to rent the property long term rental contract for 1 year, it will be expire next August 2025, current rent is $2,250 minus expenses, cash flow is $1,600 each month.

I am considering whether asking  the bank for a loan over the property to use this capital to buy another fix -flip property   Or to sell the property,  ( maybe  wholesaling because closings costs would be expensive leaving no profit left)  

I am here to read your ideas on this. Thanks in advance! 

 @Yesenia Martinez  I would do a cash out refi up to 60% loan to value to free up cash. Why 60% loan to value?  That is the max loan to value where you can get the best rate available which will still give you 135k~ in cash for the next project, but leaving you with healthy cash flow on the property with the cheapest cost of interest you qualify for.