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Started By
Message
Selling investment property?
Posted on 7/2/21 at 12:33 pm
Posted on 7/2/21 at 12:33 pm
These calculators aren't, I feel, the best indicators of selling or keeping. I will be brief in this asking should I sell or keep?
House bought in 2011: $37,000. Rental since 2015 (capital gains will be 15% I believe). Offered $100k cash for it. It rents for $900/month. It is owned free and clear. Taxes and insurance are $2,500/year and of course I pay income tax on the property as well.
I live about 75 minutes from the property. It is an easy rental and good location that went from farmland to growing community in DeSoto County, MS. I have five rentals total (the other four in Oxford where I live) and this is the only one I own outright.
No debt aside from the mortgages. Likely would take a chunk and invest.
House bought in 2011: $37,000. Rental since 2015 (capital gains will be 15% I believe). Offered $100k cash for it. It rents for $900/month. It is owned free and clear. Taxes and insurance are $2,500/year and of course I pay income tax on the property as well.
I live about 75 minutes from the property. It is an easy rental and good location that went from farmland to growing community in DeSoto County, MS. I have five rentals total (the other four in Oxford where I live) and this is the only one I own outright.
No debt aside from the mortgages. Likely would take a chunk and invest.
6
Posted on 7/2/21 at 12:48 pm to rpg37
Will you be subject to depreciation recapture?
Posted on 7/2/21 at 12:49 pm to rpg37
It’s an appreciating property asset with great passive income. I’d say keep it unless an emergency comes up where you would have to sell it.
This post was edited on 7/2/21 at 1:09 pm
Posted on 7/2/21 at 12:59 pm to jimbeam
quote:
Will you be subject to depreciation recapture?
According to my last tax report, about $1,300/year for five years or so using the 27.5 year MARCS. Not sure how this works.
Posted on 7/2/21 at 1:04 pm to rpg37
Don't forget to add appreciation into your equation.
$525 a month over 10 years!
$525 a month over 10 years!
Posted on 7/2/21 at 1:06 pm to ItzMe1972
quote:
Don't forget to add appreciation into your equation.
$525 a month over 10 years!
Where is this number coming from?
Posted on 7/2/21 at 1:10 pm to rpg37
$100,000 offer
$37,000 cost
$63,000 appreciation
$63,000/ 120 months =$525
120 months-10 years
$37,000 cost
$63,000 appreciation
$63,000/ 120 months =$525
120 months-10 years
This post was edited on 7/2/21 at 1:12 pm
Posted on 7/2/21 at 1:14 pm to ItzMe1972
Oh yeah, capital gains tax will be there. I did sink some money into it and added a sunroom so I will be able to offset that about $15k, but yes. It's a good situation to be in and neither one is a bad choice. I guess the real money question is $1,000/month (not including taxes and capital expenses) for life or $75k or so after all taxes and then investing it.
I bought this house a HUD home. At the time, nobody lived in this neighborhood. Now, it's booming. Appreciation in that area will continue, but not to that degree. I have been very fortunate.
I bought this house a HUD home. At the time, nobody lived in this neighborhood. Now, it's booming. Appreciation in that area will continue, but not to that degree. I have been very fortunate.
This post was edited on 7/2/21 at 1:15 pm
Posted on 7/2/21 at 1:20 pm to rpg37
"I guess the real money question is $1,000/month (not including taxes and capital expenses) for life or $75k or so after all taxes and then investing it."
It is a good situation to be in. You could ask Siri to flip a coin....
I have a house that a 10 year tenant just moved out of. I am pondering whether to sell, but most likely will keep.
I paid about $85,000 and he paid me $144,000 in rent over that time. Purchased at Sheriff Sale and worth about $175,000 now.
Note: Stock Market has been on a tear, but will not always be that way. Good to have $ in both.
It is a good situation to be in. You could ask Siri to flip a coin....
I have a house that a 10 year tenant just moved out of. I am pondering whether to sell, but most likely will keep.
I paid about $85,000 and he paid me $144,000 in rent over that time. Purchased at Sheriff Sale and worth about $175,000 now.
Note: Stock Market has been on a tear, but will not always be that way. Good to have $ in both.
This post was edited on 7/2/21 at 1:26 pm
Posted on 7/2/21 at 1:25 pm to rpg37
quote:
I guess the real money question is $1,000/month (not including taxes and capital expenses) for life or $75k or so after all taxes and then investing it.
I agree in that it's really more of a personal and lifestyle choice, too. If it's an easy rental to manage, I'd say keep it. I do think there's value in both depending on what you want. Me, personally, judging by all the information at hand, would keep it. If this is a growing area, you may get an offer for 150-200k in 10 years or so. Compound that with growing rent rates, possibly even beyond 1k a month, you're sitting pretty.
Posted on 7/2/21 at 1:29 pm to MrJimBeam
quote:
agree in that it's really more of a personal and lifestyle choice, too. If it's an easy rental to manage, I'd say keep it. I do think there's value in both depending on what you want. Me, personally, judging by all the information at hand, would keep it. If this is a growing area, you may get an offer for 150-200k in 10 years or so. Compound that with growing rent rates, possibly even beyond 1k a month, you're sitting pretty.
Agreed with most of that...it is only a two-bed two-bath home of about 1,000 sq. ft. It is the smallest home in the neighborhood. I feel like unless inflation just skyrockets that the rate of increase of the past nine years will be far greater than what the next nine will do.
Posted on 7/2/21 at 2:24 pm to rpg37
quote:
I feel like unless inflation just skyrockets that the rate of increase of the past nine years will be far greater than what the next nine will do.
Will you be putting your gains into things that will (hopefully) outpace the future gains you’d make by continuing to hold this rental? That would include paying off high interest debt.
If the answer to that is no, me personally, I’d keep it. That is, unless it’s a real management headache.
Posted on 7/2/21 at 2:54 pm to rpg37
Posted on 7/2/21 at 3:32 pm to Jag_Warrior
I’d dump it. You have 5 rentals and this is the only one outside your zip code? Worst case, take the money and put it towards another property in a neighborhood where your others are located.
99% of the rental headache is dealing with renters. Life’s much simpler and hassle free when the rental is only a couple miles away. A $1k/mo rental isn’t worth the anxiety knowing you might have a 1 hr drive any time issues arise at your property.
99% of the rental headache is dealing with renters. Life’s much simpler and hassle free when the rental is only a couple miles away. A $1k/mo rental isn’t worth the anxiety knowing you might have a 1 hr drive any time issues arise at your property.
Posted on 7/3/21 at 11:26 am to Jag_Warrior
quote:
Will you be putting your gains into things that will (hopefully) outpace the future gains you’d make by continuing to hold this rental? That would include paying off high interest debt.
I have no debt, so I would likely invest. I would like to think I would best the return with investments, but no one knows that answer.
Posted on 7/3/21 at 11:39 am to rpg37
Don’t sell it
Posted on 7/3/21 at 12:12 pm to Camp Randall
I’d keep it
God isn’t making anymore land
God isn’t making anymore land
Posted on 7/3/21 at 2:14 pm to The Levee
I am leaning towards keeping it. Just was thrown when an offer got put. If I hold for 10 years, presumably it'll be worth more and I would have collected somewhere around $120k over time. Yes, it's taxes and expenses will accrue, but it's still too solid.
Posted on 7/5/21 at 6:44 am to rpg37
Counter offer for $150k
Posted on 7/5/21 at 10:03 am to rpg37
Not only keep it, but put a mortgage on it. Use that cash to reinvest. Always keep your properties indebted so there’s not much to sue for should a renter try. With the financials on that unit you can pay a management company if you don’t want to deal with the 75 miles.
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