Then if you can sell, you probably should. Unless you are committed to the market long term, in which case these things have their ups and downs. By long term I’m talking 10 years or so, not just a couple of years. One thing is certain, the political landscape has a lot to do with growth or not. The states experiencing the best growth have the most hands off governments, while the ones with the most laws, regulations and taxes don’t fare so well. If the 2008 election leaves us with people in Washington who will not extend the tax cuts, expect that the economic situation will get much worse.
So, for me, I would sell because Ohio does not have a healthy enough economic climate to weather a big increase in money removed from the economy by taxation.
So you have $650/month or $7800/year in free cash flow. Eventually it will need something in maintenance but for now it’s pretty good.
The decision on selling is affected by appreciation rates, in TX they’re p**s poor, in other states they at least exist. I really like having paid for RE but not to the point where I give up income to own it.
My mutual fund portfolio hasn’t dropped below 10%/year in the past 15 years, but I like RE to balance my portfolio. Here’s my thoughts on sales price versus strategy.
Sale price below $78K, keep it forever*
Sale price from $78K-$100K, keep it till the management problems start to grate on my nerves*
Sale price over $100K, sell it today!
*or until the neighborhood is full of gang bangers.
If the $800 per month covers all of your expenses, and you have taxable income you can offset depreciation and other write offs against, you might consider holding the property. However, if it takes months to fill a vacancy, then you will be better off selling once the property i vacant.
In that case, my advice would be to hold and rent, unless the economic growth has stalled or has been in decline for a while, in which case you’ll find yourself lowering rents to fill the vacancy.
The problem with lower rents is it attracts a different market and the lower the rents the more headaches.