All Forum Posts by: Elke Cardella

Does anyone know a good source to find out a town/zip code's rental rate versus ownership? I'm trying to find a good way to research how prevalent renting is in certain areas in which I'm considering investing. Any help would be appreciated.

After thinking about this a bit more, I'm still not sure it makes sense. Feel free to point out any flawed logic here but the transaction costs to buy and then sell a new house would add up to about $55k (assuming 10% including broker's fees and other costs on both transactions). Let's say that I then bought a house that profited $3400 per year (instead of losing $3400 a year) for a net annual change of $6800 per year. It would then take about 8 years to "break even" on the deal ($55k/$6.8k), meaning it would take 8 years for the deal to pay off in improved cash flow to offset the transaction cost of $55k to switch investments. 8 years and $55k seems like a lot of money and a long time. For those of you who advise selling negative cash flow investments, generally speaking, how do you reconcile the huge transaction costs of doing so? Thanks in advance!

Thanks everyone for your responses. The opinion that it makes sense to sell so I can use the equity to invest in a cash flow positive house particularly resonates. The challenge there being finding the next property and of course, overcoming the inertia associated with owning an out of state home that for the most part takes care of itself with the exception of the $3400 annual loss. 

I owe $377k and it's worth $530k. I don't know what increase in value to forecast so I put 1% in as a placeholder. I certainly hope that the growth is more than 1%. 

I currently own a house that has a negative cash flow of $3400 per year. I am trying to decide if it makes sense to keep the house or to sell it. I've done some analysis of the benefits of holding it despite the cash flow loss and figured that the house gives me a "net worth" gain of about $10k per year taking everything into consideration (future cash flow, the principal being paid down by renters, the increase in the value of the house where I've assumed only a 1% increase to be conservative). The challenge is that I've never seen this played out before. Does anyone have any experience with holding a negative cash flow house long term and the economics moving in their favor? Thanks in advance.