I own a duplex and triplex in Seattle's core neighborhoods. I've lived in the duplex 4 of the last 5 years, and am thinking it might make sense to sell to avoid capitol gains. Most of my net worth is in the real estate sector so selling would be a diversification opportunity.
Is it a no-brainer to sell now or should I hold and continue getting better rental profit?
Purchase price (2012): $373,000
Loan balance: $318,000, 26 years left, 3.25% assumable FHA mortgage
Monthly rents: $2,300 & $2,200
Net annual profit (after taxes, mortgage, maintenance, insurance): $20,844
Estimated market value: $850,000 - $1,000,000
Estimated selling costs: $55,860
Estimated $ in my pocket after sale: $576,140
I raise the rent on each unit by ~3% a year and the rents are at a fair market value. The house is well maintained. The lot is 4,000 sqft and zoned low rise which means a developer may be interested in building two structures even though the house is already a good investment property. It's also a desirable option for owner occupied because of the floor plan.
I would be selling without an agent so my estimated selling costs are based on the buyer's agent commission, excise tax, title ins. and escrow fees.
My selling hesitation is that property values and rents will continue to rise in Seattle and I will have missed an opportunity by selling too soon. Also I know that I'll get a set income with the monthly rents, but the stock market fluctuates. I do not mind being a land lord and have imagined doing it into old age. I'm 34 now.
My goal is to semi-fire in the next few years.
Thanks in advance for reading and offering your insights!