Rent it or sell it?

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It is worth about $300,000 and is already paid off. My expenses to keep the office will be:

$4000 per year condo dues
$5000 per year in taxes
$1000 per year insurance, water, etc

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I gotta be honest, you're in elite status. If these numbers are true, you are definitely not needing the passive income. It is unlikely the money is meaningful and it could be stressful. I say sell it and move on to a new location.

Is the $5K property tax or expected income tax?

Here's a good article, LINK .

You'll be able to write off a lot of the expenses along with depreciating the value of the building.

After income tax, you might net $17K.

I'd be tempted to selling.

I think you have to consider the opportunity cost of an alternative and then layer in risk.

You have $300k equity invested which yields a $20K equity FCF return of only 6.7%.

It sounds like your current situation is very low Beta but real estate is generally a more volatile industry.

Adding some leverage to your investment is going to goose your EFCF returns if you want to take some of your cash out of this investment.

Are you positive on those rent numbers? Seems odd a space worth $300k rents commercially for only $30k a year? That's really low, twice that would be more average? It would be cheaper for someone to come in and rent then buy that. A general rule of thumb for residential is 1% of property value a month for rent, so that's $3,000/ month or $36k a year. Usually commercial is more, but I'm not experienced in commercial at all?

Personally, I'd go talk to a commercial leasing company and see what they have to say. May be fairly inexpensive for you to have them do everything for you and they'll be able to give you some good rent projections.

For one, you can probably have your tenants pay some of those expenses.

You should be depreciating the cost of the building already right? What did you buy it at?you also 100% should talk to a cpa about it, as there could be some real benefits to you to sell or or to rent. By benefits I mean $25k+ one way or another. The tax benefits could easily be the deciding factor.

If it's worth $300k after closing costs you are looking at closer to $270k. If you can get quality long term tenants for $25k passive income on $274k equity id have a hard time selling.

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Please explain how do you pay $1,000.00 annual for insurance let alone add water and ETC. Liability only? I ask since mine is considerably higher. I pay over $1K in Baton Rouge for Water, combined w/sewer and solid waste.

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My water/sewer is $33 per month or $396 a year. The insurance is $475.00 a year. Other small stuff brings it to about $1000 per year.

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Are you positive on those rent numbers? Seems odd a space worth $300k rents commercially for only $30k a year? That's really low, twice that would be more average?

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I know. It seems way low to me too. That is what makes this a difficult decision.

I may need to talk to some commercial realtors and see if they can get me more per month. I think it is worth more than $20 a sq foot. which is the reported going rate in my area.

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What city is your office space in? $20 seems incredibly high

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Suburb of Birmingham. I have been told to expect $20 per sq foot in this high demand area but I don't know what any other owners are getting for their spaces.

I forgot you were talking commercial office space, those prices are probably right.

I'd definitely make a phone call to a commercial realtor though. See what kind of numbers they give you. Then immediately call your cpa. I wouldn't do anything until getting both of their advice.

As said above, you gotta be forgetting property insurance? Like flood, wind, etc?

With those current numbers it's about a wash to buy or sell to me. Not a killer rental but if you can get good long term tenants with the ability to appreciate that's hard to beat.

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That's assuming the $300k is what he invested, no? Could be a good bit less if he has held LT which it looks like he has.

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Thank so much for everyone's thoughts on this. It would be an easy decision to kee it and rent it out if not for the sky high condo dues and property taxes. Once I factor those in, it seems the numbers get a little tighter on profitability.

Btw, I paid $260,000 for the unit. It has appreciated some in the last decade.