Should I sell or keep house?

[Jennifer N.]

Hi, I am scratching the surface of knowing much about real estate. I bought a house on Cape Cod about 6 hrs ago for $243k I have $155k left on mortgage. I’ve tried renting it out during the summer season but I have a lot to learn as far as making it pay for itself and stay booked for summers at top dollar. Potential rental rates have been $1600/wk but I could try to find a new strategy (Air BnB, VRBO) and make an effort to make money off of it. Realtors have been contacting me about selling it because the market on Cape Cod has exploded, especially since Covid. I’ve been told it could sell for over $400k. Super appreciate any thoughts or guidance or resources that may be helpful. Thank you!

[Bryan Vukelich]

Originally posted by @Jennifer N.:

Hi, I am scratching the surface of knowing much about real estate. I bought a house on Cape Cod about 6 hrs ago for $243k I have $155k left on mortgage. I’ve tried renting it out during the summer season but I have a lot to learn as far as making it pay for itself and stay booked for summers at top dollar. Potential rental rates have been $1600/wk but I could try to find a new strategy (Air BnB, VRBO) and make an effort to make money off of it. Realtors have been contacting me about selling it because the market on Cape Cod has exploded, especially since Covid. I’ve been told it could sell for over $400k. Super appreciate any thoughts or guidance or resources that may be helpful. Thank you!

Hi Jennifer,

It all depends on what your real estate goals are, which you can only determine for yourself.  What made you originally buy the house?  Personally, when I contemplate whether to continue holding or to sell a property, it usually comes down to opportunity cost.  Could I allocated those funds somewhere else and potentially earn a higher return.  But here are some things I recommend you consider:

* Would you want to keep it as a STR? If so, would you self manage or hire someone?

* What is realist earning potential as a STR? What kind of rate of return on your money would the provide you?

* Can you refi your current mortgage?

* Can you possibly do a cashout refi and reinvest those proceeds elsewhere and be cash positive?

* Do you believe real estate values will continue to appreciate in Cape Code?

* If you sold, are there other places you can invest to earn a higher return on your money.  

* And what are the tax ramifications if you sold and kept the cash?