Does it make sense to sell rental property and invest the money?

[FiredUp321]

I bought a property back in 2012 for 60,000 it is now valued around 200,000 more or less. It's a duplex and I rent each side for $1,000/mo I manage myself and it's in a lcol so maintenance costs are low as well as propert taxes (1,000/yr) I have very little vacancy rate as some people have stayed for 5 years others only 1 year. I'm trying to do the math on whether it's worth just selling and investing the profits but want to guage what I'd pay in taxes and whether it's worth selling or keeping. I'm 32yo so have many years for compounding to work but also it can appreciate in value over time as well. Any help with this is appreciated. 

[uniwelder]

Based on the little known, it sounds like a great rental that you should keep.  You don't hear of many properties that meet the 1% rule, not that it's a great gauge for rentals.  I assume your mortgage is nonexistent or very low.  Annual rental income might be considered 23k, minus 3k perhaps of expenses, so 20k in your pocket.  Is the place in good shape or getting run down?  Will it need new hvac or roof, etc?  Do you find yourself working on it more than you like?

If you sold, depreciation recapture might be 20k, capital gains 140k, 15k transaction fees, so if you paid 15% (depending on what your income shows when you're doing taxes) on that, you might pocket 120k or so?  You'd need stock market returns better than 15% to match what you're getting as a rental. 

My math is pretty sloppy, so I'm sure you have better numbers you can more accurately calculate this with.  Can you give us more information?

[clarkfan1979]

Your rental is likely to have higher returns than the S & P 500. However, it's also going to require more work than the S & P 500. The answer is based on how you value your time. If it's not too much of a hassle, I would keep it.

It's not normal for LCOL areas to appreciate from 60K to 200K since 2012. If you didn't do any repairs after you bought, that's an average appreciation of 10.55%/year. I bought a rental in Fort Myers, FL with very similar returns since 2012, but I wouldn't consider it LCOL. I bought it for 95K, did 16K worth of repairs (by myself) and now it's worth 375K, which is about 10.7%/year. 

Going forward, I'm estimating 5%/year appreciation over the next 5 years for my Fort Myers rental. 

[FiredUp321]

Based on the little known, it sounds like a great rental that you should keep.  You don't hear of many properties that meet the 1% rule, not that it's a great gauge for rentals.  I assume your mortgage is nonexistent or very low.  Annual rental income might be considered 23k, minus 3k perhaps of expenses, so 20k in your pocket.  Is the place in good shape or getting run down?  Will it need new hvac or roof, etc?  Do you find yourself working on it more than you like?

If you sold, depreciation recapture might be 20k, capital gains 140k, 15k transaction fees, so if you paid 15% (depending on what your income shows when you're doing taxes) on that, you might pocket 120k or so?  You'd need stock market returns better than 15% to match what you're getting as a rental. 

My math is pretty sloppy, so I'm sure you have better numbers you can more accurately calculate this with.  Can you give us more information?

Payment is a but over 400 per month. It's in decent condition, new electrical, new plumbing, new ac, new Hardie siding. The only thing it'll need soon is a new roof. It's easy to manage.

[FiredUp321]

Your rental is likely to have higher returns than the S & P 500. However, it's also going to require more work than the S & P 500. The answer is based on how you value your time. If it's not too much of a hassle, I would keep it.

It's not normal for LCOL areas to appreciate from 60K to 200K since 2012. If you didn't do any repairs after you bought, that's an average appreciation of 10.55%/year. I bought a rental in Fort Myers, FL with very similar returns since 2012, but I wouldn't consider it LCOL. I bought it for 95K, did 16K worth of repairs (by myself) and now it's worth 375K, which is about 10.7%/year. 

Going forward, I'm estimating 5%/year appreciation over the next 5 years for my Fort Myers rental.

I did about 20k of repairs mostly myself. It's in downtown in a small lcol but close to the heart of the city as well as close to the airport and local hospitals. I find it easy to manage now that I've got the hang of it, but I kinda suck at tracking how much time and money I put into it but it's nothing crazy.

[Dicey]

Sounds like you have a winner on your hands. Why kill the golden goose?

[partgypsy]

Yeah sounds like renting it is better. Just revisit in 5 years or whenever you get tired of being a landlord.