This article came out recently and I thought it brought about an interesting thought process. First and foremost, there's a link to the article below. Second is, I think the answer is that it depends.
More often than not, I'm a believer in the idea that if you can hang on to your real estate, you ought to. Real estate is typically the best way to build long term wealth. As a result, there are few circumstances that I can think of to justify selling an asset that is supposed to be generating income.
First, is the asset performing the way that it should? Meaning, is it profitable and cash flowing the way you would like it to be profiting and flowing? How is the vacancy? What is the cash flow? Is the property covering its own costs and adding some to your pocket every month? If the answer is yes, I'm reluctant to recommend selling. If the answer is no, there are two more questions to ask.
Could you be making more in rental income on another property if you deferred your capital gains tax and completed a 1031 exchange? This is most common with properties that were often primary, single family homes. Maybe it rents for about $10,000/month, but maybe you could be making closer to $15,000/month off a 4-plex. Maybe it would be worth it to make the swap.
If you couldn't be making more and you've taken account for the taxes you'd need to pay and you're tired of your mortgage, go for it!! The other element in this equation, is maybe you're going to exercise Prop 19. How nice would it be to sell your home, buy another and need either no loan or a smaller loan for your next home.
For the full article, click the link below!!
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