Should I Sell, or Should I Hold?

[Beau Pearson]

Hi folks. I need some advice. I have two SFR that cash flow. I’m considering selling one to pay off the other. Here are the figures: House 1 Purchase Price $110,000.00 20% down 30yr fixed 4.75% 3-2 CBS Estimated value: $197,000.00 Mortgage : $81,000 Rent: $1,450 PITI: 787.37 Vacancy/Capex/M&R 18%: $261.00 FCF: $402 House 2 Purchase Price: 131,000 3-2 20% down 30yr fixed @ 4.5% built 1983 CBS Estimated Value: $170,000 Mortgage: $99,641.00 Rent: $1350 PITI: $837.42 Vacancy/Capex/M&R: $243.00 FCF: $270.00 I’ve always been of the mindset to hold any income producing asset that produces cash flow, I mean why would you sell it? But I have my personal home paid off and like the idea of having a rental paid off as well. So I was considering selling house 2 to pay off house 1. Now, it’s important to note that I save enough free cash from my job to pay off house 1 within two years without selling any house. But I was taking into account where we are in the market cycle. Thoughts? These homes are all in South Florida. There is strong rental demand. But they are building quite a bit in my area.

[Brian Garrett]

I wouldn't sell any property that cash flows and is appreciating unless I absolutely needed the capital, had an opportunity to 1031 into a much better and more lucrative deal or if the property was in a location I no longer wanted to be in.