Author Topic: Should I sell?  (Read 802 times)

SaraB

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Should I sell?
« on: August 05, 2019, 08:25:41 PM »
Hello!
I'll try to make this short... I bought a primary in 2013 before the boom in Northern Colorado, which is now a rental. The mortgage is $1000 and it rents for $1650. Because we lived it two of the last five years if I sell it within the next 11 weeks I won't have to pay capital gains tax. in case your not familiar with this market, at this time, 11 weeks is not unreasonable and homes in this price range generally go under contract in a few days. I owe 165 and I could likely sell it for 300-310 (if not more but I want to be conservative). I do not have a real estate license  so after fees I think I would walk away with ~117K.

So my options are to sell now and walk with the cash or keep it as a long-term rental for passive income. I may try to post this in the real estate forum as well. Thanks in advance!

erutio

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Re: Should I sell?
« Reply #1 on: August 05, 2019, 10:04:35 PM »
The numbers don't support this property as a long-term rental for passive income.

However, you have to ask youself: do you like being a landlord?  Do you have something earmarked for the funds you will receive from the sell?

Usually properties that don't cash flow well will rely on appreciation, which has happened for your place.  So good for you, you should probably sell it now.


aspiringnomad

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Re: Should I sell?
« Reply #2 on: August 05, 2019, 10:12:50 PM »
I would definitely sell before the primary resident tax exclusion expires. Taxes will put a decent dent into your returns once they kick in.

Edited to add that when calculating your capital gains, it doesn't matter how much you owe on the mortgage, but what you paid for the property (which you didn't mention).
« Last Edit: August 05, 2019, 10:14:40 PM by aspiringnomad »

SaraB

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Re: Should I sell?
« Reply #3 on: August 06, 2019, 06:21:44 AM »
@aspiringnomad I paid 174 but refi-ed once to pay for repairs and drop MPI.
@erutio We planned on using the funds for retirement income and as a way to diversify. We also hoped to move back into the house once ours girls had moved out and the renters have it paid off. Just curious? Why do the numbers not support a long-term rental? I'm just curious because I feel like it's so hard to get anything bought recently to cash flow right now! I thought it was pretty good!

poetdereves

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Re: Should I sell?
« Reply #4 on: August 06, 2019, 09:35:38 AM »
Unless you really like being a landlord I would sell it. My wife and I also bought a home in Colorado in 2013 and sold it after a couple years, pocketing nearly $100k. We used some of the profit as a down payment on another home in a LCOL area, paid off our other debts, and have really benefited from the freedom a little money in the bank can offer. Luckily for us, prices in our location kind of tapered off and have even dipped a bit since our sale.

affordablehousing

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Re: Should I sell?
« Reply #5 on: August 06, 2019, 10:00:27 AM »
@SaraB, I think it is a decent rental. Because guess what, it's in a place people actually want to live! Most of the "great rentals" touted in this forum it seems are from more professionalized landlords who are agnostic on location. It sounds too like you don't need the money so maybe just let it ride. Think hard about how the past 3 years have been, as the tax situation supports you sticking it out much longer rather than a little longer to justify the cap gains tax, or you may sell it when you know a different property you want and then you can do a 1031 exchange for your vacation/retirement house.

Jon Bon

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Re: Should I sell?
« Reply #6 on: August 06, 2019, 10:20:43 AM »
SaraB

I think you got the correct answer asking this question on the RE forums. I think you know what the numbers dictate. However you have an emotional attachment to that house. But I think you need to think about how to value that. With my back of the napkin math it is probably costing you about 10k a year to keep right now because it is a HORRIBLE rental. 

Is that 10k a year worth the emotional attachment? Are you rich? Are you Fire? If you are or close, or don't need 100k tax free in your bank account sure hang onto it. Just please dont ignore the opportunity cost on this, because it is killing you here.