The Saving Advice Forums - A classic personal finance community.

Should I sell my rental house for profit now?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Should I sell my rental house for profit now?

    Hi,

    I inherited a small house from my parents that was built in 1970. The house is located in Northern Ca and has gone up 900% from when it was first purchased. The house is paid off and after all fees and taxes I receive about $300 in rent each month. Although we have nice renters, the house is in need of repairs more and more. I'm wondering if this "investment" is maxed out at this point and if I should sell rather than put more $$$ into it only to cut into my slim rent check…..what do you think?

  • #2
    Sell it. It looks like more profit in the sale than the rent check.
    LivingAlmostLarge Blog

    Comment


    • #3
      Never hurts to take profits off the table, taking profits is the #1 concern with any investing but you should have another investment lined up that will make profit or income, does you no good sitting in the bank
      retired in 2009 at the age of 39 with less than 300K total net worth

      Comment


      • #4
        Agree with 97guns but also, why are you only making $300 a month if there's no mortgage? Whats the rent vs expenses? How much will you be able to sell it for? I'd first assess if you're leaving money on the table by not renting at market value and second look at how much you could be earning by investing the profit from the sale elsewhere - whatever makes more wins.

        Comment


        • #5
          Originally posted by riverwed070707 View Post
          whatever makes more wins.
          Meh...not exactly. There is work involved with being a landlord. Finding new tenants, something breaks, non paying tenants, etc etc. You may make more money renting but the amount of time/headache may not be worth it.

          If someone can invest money in something that makes slightly less money than a rental but requires almost no time/babysitting...hmmm...only you can make that call.

          Different strokes for different folks.

          Comment


          • #6
            Originally posted by rennigade View Post
            Meh...not exactly. There is work involved with being a landlord. Finding new tenants, something breaks, non paying tenants, etc etc. You may make more money renting but the amount of time/headache may not be worth it.

            If someone can invest money in something that makes slightly less money than a rental but requires almost no time/babysitting...hmmm...only you can make that call.

            Different strokes for different folks.
            Maintenance and vacancy are taken into account when calculating the ROI on an investment property. I don't disagree that it needs to be enough more to make it worth it, but doesn't mean its not worth running the numbers.

            Comment


            • #7
              Originally posted by Submariner100 View Post
              Hi,

              I inherited a small house from my parents that was built in 1970. The house is located in Northern Ca and has gone up 900% from when it was first purchased. The house is paid off and after all fees and taxes I receive about $300 in rent each month. Although we have nice renters, the house is in need of repairs more and more. I'm wondering if this "investment" is maxed out at this point and if I should sell rather than put more $$$ into it only to cut into my slim rent check…..what do you think?

              We have a family friend; lives in the heart of silicon valley, one-mile away from the new 49ers Levi Stadium. Bought their home 1300 sqt/3 bedroom 2bath...for $450K in 2009 after the financial crisis. Now its worth 1.1 million freaking dollars.

              Yah.... I'd sell it.
              Got debt?
              www.mo-moneyman.com

              Comment


              • #8
                Yield Matters

                Great question and I'm in the same boat. I definitely plan to sell in the spring summer season when there are more interested buyers.

                I based my decision, like any investment, on the YIELD.

                There's different terms in real estate for it, but basically it's Annual Rental Income / Home Value.

                You could even do Annual Rental Income Net Profit / Home Value for a more accurate picture of your take-home.

                When you look at it that way do you have a great yield you couldn't find elsewhere in stocks or bonds? If so, you may want to keep it.

                If it's a cruddy yield comparable to a CD then I think you'd want to redeploy that capital somewhere else with a higher yield.

                And remember if you sell then re-invest that capital to another property within a certain period of time you can avoid the income tax on the profit.


                Hope that helps!
                Matt
                -Matt

                The Bull Market Report
                There's always a bull market here...
                Bullmarket.com

                Comment


                • #9
                  Originally posted by tripods68 View Post
                  We have a family friend; lives in the heart of silicon valley, one-mile away from the new 49ers Levi Stadium. Bought their home 1300 sqt/3 bedroom 2bath...for $450K in 2009 after the financial crisis. Now its worth 1.1 million freaking dollars.

                  Yah.... I'd sell it.


                  Yep, super easy way to become a millionaire in around 5 years. It was my road there, my market is 70 miles east of silicone valley but the results are exactly the same, picked up 5 houses for about the same as 1 would of costed me in the heart of silicone valley, now they are $215k each and bringing close to $6K in rents
                  retired in 2009 at the age of 39 with less than 300K total net worth

                  Comment


                  • #10
                    Yes if you think the homes are over valued it's always great to sell on the top of a market. Of course no one can time it perfectly. Remember what I posted earlier that you can avoid tax on your profit it you reinvest it in another property (maybe one you plan to own passively and rent like a multi family dwelling).
                    -Matt

                    The Bull Market Report
                    There's always a bull market here...
                    Bullmarket.com

                    Comment


                    • #11
                      Yes, definitely. But you should follow process of selling an investment property and focus on how to limit taxes on the gains. Ask yourself why to sell. Because the reasons for selling a rental property vary. With the help of a lawyer or a tax advisor, you can set up the sale so that the proceeds are put into an escrow account until you are ready to use them to buy a new property. The best-case scenario, as with stocks, is to put off selling an investment property.

                      Comment


                      • #12
                        Yes, but you should follow process of selling an investment property and focus on how to limit taxes on the gains. Ask yourself why to sell. Because the reasons for selling a rental property vary. With the help of a lawyer or a tax advisor, you can set up the sale so that the proceeds are put into an escrow account until you are ready to use them to buy a new property. The best-case scenario, as with stocks, is to put off selling an investment property.

                        Comment

                        Working...
                        X