Considerations for selling properties

[Allison Yen]

Background: purchased 3 entry level SFH properties in Montgomery, AL in 2021. 2 of the 3 properties are older and have had rehab work done and with maintenance issues come up more than desired. They were also harder to get tenants and both vacancy has been higher. We initially decided on this market because it felt like a "safer" entry price point and we thought the cashflow would be strong. That has not been the case. The appreciation of these properties has been slower and rental market also seems a bit stagnant both of which not a huge surprise.

The tenants in both of the properties are breaking the lease around the same time, so we are considering selling the properties in order to enter another market. The sale could be break even or maybe even at a loss after all the fees and rehab work. 

My question is 1) is it premature to sell these properties after less than one year of poor performance, and 2) if selling is a good idea, should we sell off-market via our property manager or put it on the market. Either way, there will be selling fees involved, but if off market maybe less rehab work needed. If we sell, will most likely use the funds as down payment and take down a loan for a more expensive market like Atlanta, GA or Phoenix, AZ. 

Would appreciate any advice around this decision to sell or stay put. Thanks so much.