Do you know when it’s time to sell a property vs. when to keep one?
I had this same conversation with one of our Inner Circle members this past week during our 1:1 office hours.
He had a fourplex in Washington state, which he bought for a good price. But thanks to circumstances beyond him, he was faced with almost $80K in upcoming necessary CapEx.
Especially because this property was cash flowing really well for him, he was wondering if it was worth putting money towards it or taking it off his hands. 10
So I told him what I will tell you now:
I was faced with this decision on a non-conforming single-family turned triplex fairly recently. We bought the property in 2015 for $225,000 and only had to spend a few thousand on a side sewer repair (it pays to have great contractor friends you can count on)
But after 12 years, we had some tenants move out on short notice.
Quite honestly, they left us with a mess — $50,000 worth of a mess. The property would have required a full interior remodel, a new roof, landscaping, exterior paint — not to mention all the time and labor it would take to keep renovations going.
We were cash flowing around $1300/month — net after all expenses. Which means to get this property where it needed to be, it would have taken three years’ worth of cash flow.
After giving it some more thought and thinking about my personal criteria, we decided to sell it.
We sold it for $415,000—as is. A great deal, given we’ve owned the property for six years and had virtually no CapEx investment.
Once we closed this deal, we rolled the sale proceeds into one of our exclusive off-market Inner Circle Deals — a brand new duplex in Nampa, ID. Now it cash flows over $1800+ per month, and we have over $270K in equity.
To finally answer the question — should you sell or should you keep — there are a few questions you need to answer first:
What does your future CapEx budget look like? If you’re facing a large expense, it’s time to sell.
Do you want to own this location for the long term? If not, it’s time to sell.
Are there other investment opportunities available to you where you could increase cash flow or invest in nicer, newer properties? If there are, it’s time to sell.
How much time does this property take to manage? If it will take a lot of time, management, stress, it’s time to sell.
Now’s the time to trade those aging properties that require a lot in CapEx for newer builds to bring in more cash flow.
If you want our support navigating this process, plus the perks of my 1:1 support to ask specific questions about your investment properties, we’ve got you covered when you join the Inner Circle