If you look at the cashflow, tax savings, appreciation, and principal reduction and you're still in the red, then it's time to sell, but I doubt that's the case.  

If you're focusing on trying to save the commission on a $25k purchase (the seller thinks they should get to keep it, and the buyer thinks they should get a reduction for it), you're focusing on the wrong thing, and limiting your choices.

You got it.The IRS interprets either boot cash or a reduction purchase price to be a taking of profit.  

If most people could put an extra $25,320 in their pocket in the first five years of owning a rental property, they would do it regardless of the reduction in principal.Now, take that same loan with a 30 yr amortization at 7.5% is $699, but take into account the biggest game changer of all; qualification.  

That said, I still pay about $1k/mo out of pocket(including utilities for the building) to live in my 3 family BUT that same 1k is the exact amount of principal reduction per month.

If neither of them want you to pay them off fully, you could possibly pay them for example $20,000, but obtain a reduction in principal balance greater than that, say $22,000.

Revenue generating and expense reduction opportunities are much more plentiful as well.https://www.biggerpockets.com/blogs/9145/54408-28-...https://www.biggerpockets.com/blogs/9145/54632-28-...

We have literally seen $2,000 reductions in our rates… but a lot will depend on how well your property is constructed. 

The seller gets the principal reduction and all the appreciation.

But in our area, which is very competitive, I have got a price reduction after the original contract.