Q&A: I’m Tired of Managing My Rental Property. Should I Sell It?

Nieves (0:00)

Joe!

Mandy (0:01)

Paula!

Paula Pant (0:02)

What's happening?

Joe Salcihive (0:03)

I am happy to be with you, and you are, you're in New York, I'm in Texarkana.

Paula Pant (0:08)

For those of you who are watching on YouTube, I'm in a studio right now, so this is a fancy new setting.

Nieves (0:16)

Oh yeah.

Joe Salcihive (0:16)

It's a nice living room.

Paula Pant (0:17)

Right? It's beautiful.

Joe Salcihive (0:19)

Yes.

Paula Pant (0:20)

The aesthetics of this recording are better than ever.

Joe Salcihive (0:23)

Well, I don't wanna brag, but I'm in mom's basement.

Paula Pant (0:28)

I have been to mom's basement. Mom has a nice basement. But I got a question for you, Joe. Have you ever given up a good investment?

Joe Salcihive (0:38)

Yes, actually, I did.

One time, I realized that my rental property wasn't for me. It just wasn't for me.

Paula Pant (0:47)

Oh, all right. Well, then you are well prepared. How about that? To answer our first question today. We have a question from a caller about exactly that topic.

And after that, we're going to talk about the labor force participation rate as well as employment. We've got a question around that stemming from the first Friday episodes.

Welcome to the Afford Anything Podcast, the show that knows you can afford anything, not everything. The show covers five pillars. Financial psychology, increasing your income, investing, real estate, and entrepreneurship. Ackronym, double-I-fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode, ish, I answer questions from you, and I do so with my buddy, the former financial planner, Joe Salcihive. What's up, Joe?

Joe Salcihive (1:31)

Hey, Paula. I am writing a new book. It's about reverse psychology, and I'm hoping nobody buys it.

Paula Pant (1:36)

No.

Joe Salcihive (1:39)

Come on.

Paula Pant (1:40)

And with that, we go to our first question, which comes from Nieves.

Nieves (1:46)

Hi, Paula and Joe. My name is Nieves, and I first wanted to say that I love the show and thank you for everything that you do.

I would love to get your perspective on a financial decision I'm trying to make around my rental property. To give you some context, I recently quit my job and moved to Madrid, Spain for a year to pursue an MBA. I received a scholarship for the program, but I had to use most of my savings for a 20,000 euro deposit that will be returned after I complete a six-month internship following the MBA.

I also took out a 30,000 loan for living expenses for the next 12 months, but the interest rate is less than 4 percent. I'm 30 years old and I have around $150,000 in my old 401k, around 50,000 in my Roth IRA, and a duplex in St. Louis, Missouri that I bought in 2021 for 240,000.

The mortgage, including taxes and interest rates, is about $1,500 a month, and it brings in around $3,100 a month in rent. One of the units is a midterm rental, so I do have additional expenses associated with that unit. I have been thinking about selling the property because my tenants have started paying late and the property needs a new roof and a few other repairs. I don't have enough cash to replace the roof out of pocket and I'm feeling stressed that my tenants are paying late. I used to live in St. Louis, and managing the property was not hard, but now that I'm abroad, it has become a little bit of a hassle. I could likely sell the property for around 250,000 to 275,000, and I currently owe 180,000 on the mortgage. My biggest question is how to know when it's okay to let go of an investment that is objectively a good long-term asset. I've always viewed the duplex as part of my long-term financial security and I have independent on cash flow to fund my lifestyle. I'm struggling with whether selling will be a smart simplification or whether I'll be giving up a valuable long-term asset. I think most people struggle with the late ratification, but I may be struggling with the opposite. I'm having a hard time giving myself permission to let go of an asset, even when doing so might make sense for my current life and also to give me peace of mind. We'll love to hear how you think about this. Thank you.

Paula Pant (4:06)

Nevis, I love that question. What a beautiful question. First of all, I want to say congratulations on moving to Madrid, on the MBA program, on this next exciting, incredible stage in your life.

Congratulations on where your life is taking you because it sounds incredibly exciting.