Sell or hold?

[Randall King]

I have had a rental property that I bought 2020. Initially, I was cash flowing, but 2023 and 2024, I have been negative cash flowing. Since I bought this house during Covid, equity has dramatically gone up. I have not been concerned about negative cash flowing due to gaining so much equity. Now that the housing market is slowly settling, should I sell and get out the equity I have? or should I keep it and continue to lose about $200 a month?  

[Corey Conklin]

My first question is why did a cash flowing asset lose it's cash flow? You haven't provided enough information on that to allow specific advice.

If you purchased the property in 2020 you should still be at a good interest rate (assuming a 5 year balloon ARM). I know taxes and insurance have gone up a lot in that time so I understand that problem but the solid rent increases in that time have been able to cover most of that (at least for me it has worked out). Have you not increased rent?

Have you had larger Cap Ex projects that you didn't anticipate? Roof, HVAC, sewer, etc.

Has the property been poorly managed? i.e. longer than normal vacancy, bad tenant screening, poor maintenance, skipped rent payments, etc.

There could be a handful of reasons why it lost it's ability to cash flow. Instead of dumping a property that isn't cash flowing I would understand why it isn't cash flowing. If it's something that you have caused then it needs to be corrected. If not you'll just 1031 into another property to fall into the same trap.