we have debating this a lot the last 6 months.

What is your magic number on selling versus keeping and renting?

Example: Bought a house for $30k

Can sell for $40k, or rent it out for $500/month which is 6k a year.

I would probably keep that one. I know, there is other factors like condition of house, hood, and etc.

But just looking of others rules of thumb.

Example: $35k house, sell for $55k, or rent for $675????

Thoughts??

Too many variables. Analyze from the opportunity cost viewpoint.

1) What would you do with the extra cash if you had it? (what opportunity do gain?)

Nothing wrong with Thinning the Herd,

while keeping the Healthier Cash Cows.

I don't know how many property's you own? But, real estate is a great investment with sheltering some of the income via depreciation write-offs. I had around 20 friends that all wanted to sell their starter homes to help pay for a newer larger home for their growing family. They did not like the idea of being a landlord. But they didn't mind working at a "job" over time and not getting paid for the extra hours. Here is a few examples of the consequences of owning a second piece of real estate as a rental.

Venice California. Purchased the home for $80,000 and was going to sell for $120,000. I made her keep it. Within 20 years she sold it for $980,000. That's a lot better than only a $40,000 taxable gain.

Marina Del Ray, a condo could have been sold for $500,000. They kept it for 7 years and then sold it for $895,000.

Lee,

On more than one occasion, I have sold one house and just turned around and bought another one,...in a better neighborhood. Better hoods produce better rents and less drama for the same square footage.

How does it play into your long term plans and goals? The market is hot. If you're playing Monopoly like myself and Dave(MO) among others - selling older, more tired houses - places we bought when cheap was all we could afford - and replacing them with nicer units.. I'd say now is a great time to sell... no telling how long the market will be hot...

LeePookie,

(If you reversed your names you woudl sound liek a character from a Jackie Chan movie - Pookie Lee.)

I'm dropping crummy houses and paying off the nice higher rent keepers.

I'm not focused on ROI anymore. I want secure, easy income from nicer homes than rent for more money and attract nicer people.

After taxes, ins, maint that $6000 income is probably $3000 if there is no mortgage.

$10k is not much profit, esp after paying capital gains tax so I'd probably keep that one and let it pay down other mortgages.

OR use what's left of the $40k to buy a steal. Keep moving up.

BRAD

All great thoughts.

Brad and #22 hit it home as I think "moving up" in homes. Less drama, better rents (maybe not ROI) and better appreciation and exit strategy

Thinning the herd like RB mentioned is kinda what we have been doing. Sold 7 last year and actually made more money with less houses!

Talk about this years convention theme "make more with less". When folks ask how many we have I say (two.... many) I just want one that cashflows $50k a month... lol

$50k a ...month? Wow. ;)

We look for about $1000/gross minimum rents per month per unit (paying cash for the property) or it's not worth the effort these days. And we want at least two units per property unless it's dirt cheap.

I decided to sell 13 properties this year to modify my portfolio. I'm keeping the A's and selling the B's since our market is very hot and I want to take advantage of it. the plan is to replace them with only A's.

Of course everyone questioned that so I ran some numbers.

First I looked at the appreciation and the tax liability. I then calculated my costs to upgrade to sell. I looked at my gross income for each property plus annual increases in rent and appreciation over the next 10 years minus the cost of maintenance, repairs and turnover costs. My final number has the proceeds from the sales after everything will cover 12.5 years of net profit if I were to keep them.