47 year old, single with no kids. I have 215k in a roth (but unable to contribute further for the next few years). I have a home in Austin with a 30 year FHA home loan (3.25% interest and 20 years left to pay off- started at 250k and is now at 200). I have a home equity loan as well. 20 year at 7.09% with 17 years left (150k now at 136k). Currently I'm renting it and the rent pays the 30 year mortgage payment. This house with need a new hvac in next 1-3 years (15k) and probably a new roof in the next 5-10. I took the home equity loan and bought a house in Ohio. I rent this house by room and it breaks even after paying the heloc loan, utilities and management. So both houses are running but no extra money earned. I could keep them both for 20 years and they would value about 800k-1 million at that point. After realto fees and capital gains I'd probably walk away with 650k-850k. OR I could sell them both and walk away with about 130k now and put it in a solo 401k over the next couple years. In 20 years I may have 600k or more. Now it seems like selling and investing is the easier option to me BUT theres a couple things holding me back. 1. Having property is a safety net for me. I can move in to the Ohio house is I needed to and basically live for free will renting out the other rooms to hospital workers. or I can live in Austin and do the same. 2. I may make more money holding onto them vs selling but of course a lot can happen in 20 years. There's more detail I could give but just looking for some opinions. Thanks!
Should I keep my properties or sell?
byu/jeb7516 inrealestateinvesting
Posted by jeb7516
5 Comments
Also don’t forget to calculate the tax benefits of real estate. It should give you a good amount of deductions from prop taxes paid and mortgage interest.
Having said that, I would not keep them if they are barely cash flowing. Leaves too much room for issues (vacancy, unexpected expenses, insurance hikes, nightmare tenant, etc etc). You need to have enough earnings so you can keep that profit in a slush fund to cover expenses. And if none come up—great you have that in a brokerage growing.
If it’s barely cash flowing, I would say you’re better off going with the easy route and just selling and dumping it in your retirement accounts. Zero stress, zero management.
Only stick to RE if you’re going to actively manage it and ok with the risk involved.
I would hold, do a 1031 exchange in 20 years or live in each one at the end to avoid the tax. My only cost analysis question is if you are making more by putting money into investments or paying down the HELOC. Have you ran the numbers on that?
If you are asking in reddit the clear answer is don’t sell
You came to a real estate investing sub. Everyone here is gonna tell you to hold onto them and rent them out.
When they only tool you have is a hammer, everything looks like a nail.
Your safety net has a catch, if you sell them and later on need to move to Ohio or Austin, then you could just buy another property. This is assuming that your cash out from the sale will appreciate faster than the properties will.
Do the math and figure it out. If you’re highly leveraged, then it’s possible that property appreciation will do better than cashing out. But if you have minimal leverage, or you don’t think properties will appreciate much, then might as well dump them, and move to something hassle free