Looking at a friend’s decision to sell off a rental

A close friend of mine recently completed a big shift in finances.

They had lived for years in a small home and managed to pay it off. Then they moved to a slightly bigger home and turn their first into a rental. Apparently they were able to use the rent from the first home to pay the mortgage on the second.

The big change is that last month they sold their old home at a profit from what they had originally bought it for. They took all their equity and paid off their current home’a mortgage.

He went on to tell me that somehow even with the rent he had a hard time making ends meet. He has never made close to what I make so I can’t sleight him for doing what was best for family.

He also said the stress was bad. They always feared getting a bad tenant that would trash the place. We have visited them countless tunes before they moves and I can testify it wasn’t a Class A place.

The final nail in the coffin was the amount of emotional attachment he had to the place.

This may not be what I would have done, but I don’t have his financial position, his stresses, or his situation. No way I can criticize something like that. He got good usage out of the equity of his old home and managed to work his way to a better situation. I can only wish him the best.

One thought on “Looking at a friend’s decision to sell off a rental”

  1. I’ve never owned real estate. I’m a dividend growth investor, so most of our money is in blue chip stocks. The income our investments provide, while largely less leveraged than real estate income (except for my fluctuating margin balance), requires very little action on my part. I have no fear of vacancy or bad tenants. But I can see the draw of that monthly rental income, especially when comparing the cash on cash returns and the potential for capital gains. In any case, hats off to your friend for focusing their increases on paying down mortgage debt. While maybe not the path I’d take, it’s way better than hearing that your friend sold the old house and blew the money on a swanky vacation or luxury SUV.

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