I bought a 1 bed/1 bath condo about a year ago as my second investment property. I've lived in it and made significant upgrades over the past year.

It looks like I'll be in the red a couple hundred dollars at the current market rental rates. I've been telling myself that the equity and the appreciation still net out to the green in the long run.

Understand that + cash flow is the goal, but am I fooling myself thinking that I’m still in a good spot? What would you do in my position?

TIA

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If your net income (cash flow + equity payments - income tax) is still positive, I'd keep it. If not, your choice is pay selling costs or ride it out in the hopes appreciation outweighs your costs over a reasonably short time period (say 5 years) or it becomes cashflow positive. In certain high growth markets, that's what you have to do.

likesmart

Need more data. What did your numbers look like when you were buying the property? Did you over renovate? Did rents drop (no indication this is happening)?

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Thanks, see above.

Did rent prices drop in your area? Or did you buy before you evaluated what market rate rent would be? Im not sure I follow why you’re in the red here.

Could you sell it at a gain? Could you do short term or mid term rentals?

Waiting for equity to build is a gamble. If you’re losing $X per month, on the hope / gamble that the value will increase… Especially if rents continue to decline. If you can sell flat or at a gain, I think that’s worth losing $x per month, especially if that loss is before calculating for repairs / maintenance / vacancy. If you’re at a lost before accounting for repairs / maintenance / vacancy reserves…. You’re further in the red than you realize. I’d sell and move on.

One of my rental properties in an appreciation market only cashflows $450 per month, and I put all of that into a reserve account for repairs and vacancy. The house has already appreciated ~$30k in 2 years, but prices have stagnated the last 6 months. If I need to hold another 3 to 5 years to get another $50k to $70k in appreciation to hit my IRR goals, at least I have the reserves and rent growth to ride that out.

Do you have a great interest rate at least?

Sometimes it’s better to cut your losses. Taxes will continue to rise as the place appreciates. Probably will be hard for rent to catch up. Where is this place? That could give us better commentary for potential appreciation.

Is the monthly outflow net of the principal repayment? You may actually be positive if the renter also pays off your mortgage

This

Most rentals that cash flow negative are no bueno

Opportunity cost. I would make projections and compare those projections to my other options.

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