Which of these is a better investment?

[Anonymous]

We have a rental home in a highly desirable neighborhood, earning high rent ($10k+). It is starting to look dated and a list of home improvement needs are coming up. Tenant 's lease is up soon and won't be renewing (returning to home country). Should we sell it and use proceeds to invest in stocks, etc.? Or is it better to have hard assets in these unpredictable times and find another tenants?

[Anonymous]

You literally gave us no information that would help give advice.

Ages
Jobs - Are they stable?
Salaries including monthly take home
Kids - Ages, college savings situation
Rental home value, mortgage left and rate
Current housing situation including value, mortgage left and rate
Current retirement investments
Non-retirement investments
Cash savings
Monthly spend and amount saved
Expected cost of home improvements
Are the improvements needed to sell or would you sell as is?

[Anonymous]

After appreciation and full rental income, it is not uncommon for your asset to make up 12% a year as a rental. Less if you are putting a lot of money into repairs, upkeep, and updates. You would have to run the numbers to be sure. Stocks can outperform that but typically not. That said, is your rental lot of work for you? Do you need easier access to liquidity in the next few years? Are you planning to use this asset as a way to get loans for another rental?

Depending your age you may want to put it into a trust.

It is really a personal decision.

[Anonymous]

Do you know the numbers? I mean the real numbers that include: vacancies, maintenance, management fees, taxes, HOA, etc. Most people don't know their numbers or grossly overestimate their "profits."

Then you need to figure out how much you would net on a sale after realtor fees, state taxes, capital gains, and repaying depreciation.

There is obviously a diversification benefit to owning real estate, but whether it is worth it just depends on the numbers and the person.

[Anonymous]

OP: Annual rental income net $70k after overheads, carrying costs and tax. Upcoming upkeep and repairs estimated to cost $60k. If I sell it, would net around $1.7m.

[Anonymous]

Sell and buy stocks.

[Anonymous]

Anonymous wrote:We have a rental home in a highly desirable neighborhood, earning high rent ($10k+). It is starting to look dated and a list of home improvement needs are coming up. Tenant 's lease is up soon and won't be renewing (returning to home country). Should we sell it and use proceeds to invest in stocks, etc.? Or is it better to have hard assets in these unpredictable times and find another tenants?

“unpredictable times”?!?

Really? Is anything predictable? It certainly wasn’t under Biden and Obama.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have a rental home in a highly desirable neighborhood, earning high rent ($10k+). It is starting to look dated and a list of home improvement needs are coming up. Tenant 's lease is up soon and won't be renewing (returning to home country). Should we sell it and use proceeds to invest in stocks, etc.? Or is it better to have hard assets in these unpredictable times and find another tenants?

“unpredictable times”?!?

Really? Is anything predictable? It certainly wasn’t under Biden and Obama.

If the market was “predictable” I would be an extremely wealthy individual.

[Anonymous]

Sell. You probably had no business buying it in first place.
1.7 million would give you $100k easily a year with little to no work. Also, figure out how to lower your taxes going forward.

[Anonymous]

OP, do you have much in paper?

Sometimes, it's not bad to have hard assets. In a crisis, paper can evaporate overnight. But you own that house... brick, wood, glass.

However, I would not have such an expensive home to rent. It locks a lot of people out of tenancy. How about selling it off and splitting it in to two or three new rental incomes, maybe even in different locales?

[Anonymous]

Anonymous wrote:Sell. You probably had no business buying it in first place.
1.7 million would give you $100k easily a year with little to no work. Also, figure out how to lower your taxes going forward.

My rental with equity of about 500k and no mortgage generates around 35k/year. Hardly any risk (1 mile from metro) and provides a hedge against inflation and doesn’t fluctuate based on whatever Trump tweeted last night. Three of those at a cost of 150k easily beats your 100k/year off of 1.7. And I can live in it if I lose everything and become homeless.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sell. You probably had no business buying it in first place.
1.7 million would give you $100k easily a year with little to no work. Also, figure out how to lower your taxes going forward.

My rental with equity of about 500k and no mortgage generates around 35k/year. Hardly any risk (1 mile from metro) and provides a hedge against inflation and doesn’t fluctuate based on whatever Trump tweeted last night. Three of those at a cost of 150k easily beats your 100k/year off of 1.7. And I can live in it if I lose everything and become homeless.

*off of 1.5 mil, not 150k

[Anonymous]

Anonymous wrote:OP: Annual rental income net $70k after overheads, carrying costs and tax. Upcoming upkeep and repairs estimated to cost $60k. If I sell it, would net around $1.7m.

No brainer- sell, invest the money and make more than your $70k a year return.

[Anonymous]

I'd sell. We've owned and sold several rental properties and have found that we've done better in the long term by investing in the market and it's so much less of a hassle.

My only advice would be not to overestimate what your net will be after you sell. Don't forget about depreciation recapture, for one thing. There's a reason why professional real estate investors like to rollover from one property to another. Taxes when you do sell and not rollover can suck.

[Anonymous]

If you can afford to go several months without rent payment due to vacancy or the need to do renovations, or you have a tenant that stops paying rent and refuses to leave, or trashes the place, and the thought of any of this doesn't stress you out too much, then keep the rental.