Should I sell or hold this property?

[Jason Larson]

Hello,

I need a little help from a few of you seasoned investors. I bought a 3/1 house 5 years ago right before the market started to recover, put about $25k into the rehab and If I sell it, I can walk with at least $113k that I could use to BRRRR other properties. OR.... I can keep it as a rental that I would self-manage pocketing around $550 per month in cashflow, conservatively. It would take me 15+ years to make $113k from the monthy cashflow not including capital expenses and vacancy if that's even a viable way to look at it? I'm also concerned that I would be throwing away a good cashflowing property that I got into at the right time before the market took off, one that I may not be able to duplicate so easily, definitely not from the MLS anyhow. I can't decide which would be the better route to take and I keep flip-flopping back and forth. If I keep it as a rental and I'm able to find good long term tenants, I can continue collecting cashflow and take out a $50k Heloc that I could use to fund BRRRRs. But I'd be paying to use that money vs just using my own cash. Also if I want to avoid paying capital gains I'll need to sell in the next three years. So if the market does decline not only will I miss the opportunity to cash in tax free at the peak of the market but I might not even be able to access the money in my Heloc for long if the market declines enough. This home is located in a C to C- neighborhood that I'd rather not live in anymore. I also don't plan to buy in this area in the near future unless it was the only deal I could find that made sense in a 60 mile radius assuming I can find good tenants for the first deal and I was confident that I could keep duplicating those results. We also want to move closer to work as my wife and I have 90/45 minute commutes both ways. This rental would be 15-30 miles way out of the way from my next target area where I'll be living and actively looking for deals in. So it makes sense to exit the property. I just got my realtors license and can list the property myself. I also have a solid lease built and have read enough property management books to feel alright with getting my feet wet in it and that's the plan for our future properties anyway. I just can't come to a conclusion as to which is the smarter path to take?! Option 1: getting out of this less desirable area with plenty of cash in hand to fund more deals right away. Or..... Option 2: owning a cashflowing property in a C- neighborhood but having to sacrifice a decent amount of that cashflow to access equity in order to fund BRRRRs. Today, Right Now, I am leaning more towards option 1.

Help!

Thanks,

Jason

View report

*This link comes directly from our calculators, based on information input by the member who posted.

[Joe Villeneuve]

Your analysis of how long it would take for the cash flow to equal the refinanced $113k is exactly how to look at this...but you stopped there.  Why?

Your analysis of the market taking off as a bac thing to investing isn't correct. There's always a market that is working at any/every time. The number one asset a REI has, is the ability to through analysis to find those markets...and invest there.

Here's why I said you stopped in my first statement.  You need to look at what the $113k can do for you now...when it's a verb instead of a noun.  If that $113k represented a 20% down payment on a property (or properties), you would have Real Estate worth $565k.  What would the cash flow look like on that...compared to where you are right now?  I'm assuming a lot better than $550/month.  I know in the markets I invest in, that would be worth 2 or 3 properties...with a total cash flow between $2000-2500/month.