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Rental property Investment...Is it Worth it?


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I'll try to be succinct:


Purchased 8 years ago in The Heights for $277k. Small 3/2 home could now be realistically sold for $390.


We've been renting it out now for 4 years since being transferred for work (no reason to ever move back in with a larger family now).


It's a pretty low maintenance place for now and the CAP rate is 5.2-5.7%


No mortgage, good relationship with "a guy" that does good contracting/repair work and a local realtor. Has never gone more than 1.5 months unrented.


It's easy walking distance to 19th Street, HEB on 23rd, restaurants on Shepherd etc. However, it IS in an area where a ton of multi-family is moving in (think somewhere between 18th and 23rd in Greater Heights, just east of Shepherd), which kind of makes me skittish. I'm also wondering if this is as hot as the iron is going to get in that area for that size of home in that specific location. And, the option of selling, writing a check and never thinking about college for the kids or a mortgage payment on our primary in The Woodlands is always appealing.


I know there's a ton of experience on this forum, so I thought this would be a good question to ask you guys. Buy, sell, or hold?

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Is this a townhome or a single family lot? 


If you own a single family lot, I don't think it's going to go down in value (at least for an extended period of time). With lots, I would look at much more than cap-rate - the underlying real estate is also appreciating in value. I would rather pay a 5% cap rate for a property sitting on a large lot than get a 7% cap on a townhome. 


If it's a townhome, you have to consider what you plan on doing with the money. If you have other opportunities to put the capital to work that are more accretive than you currently have, the decision to sell is easier. Paying down a mortgage at 3% doesn't really make sense if you have an asset yielding more than that.

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