Is worth it to keep my two rental properties or to sell them right now?
I have two rental properties in two different states, PA and NC. My PA home was a second home for some years, which just a year ago I turned into a rental property. I made a big mistake doing that because of the huge impact it will have on taxes when I sell. That property has been just rented for 1 year and the other in NC has been for 4 years. The price of the homes have not increased significantly. I will not get much from them when I sell them. Also, the rents just cover the mortgage of the homes but for maintenance and repairs it comes straight from my pocket. I feel frustrated that I have not much money on the properties and now that I learned about the huge impact that taxes will cause me, plus that I am not making any money for me to keep from my rentals. Should I sell now? I have read that in the case of rentals I should keep them for the rest of my life. I'm not sure what to do. Thank you.
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This question is likely to be closed for primarily being opinion based, but I believe that I can provide a clear cut answer here.
Owning rental properties is work, and for some it is not pleasant work. You seem to fit in that category. Having the properties be out of state, expands the amount of work necessary and it often leads to additional expenses.
Assume you had a job that you did not like, but also paid you only enough money for gas and tolls to get to the work location. Would you continue to work there? Most assuredly "No".
Same thing here, sell the properties and be done with this. Owning rental real estate is seductive, but it is work and it has to be work that you enjoy. You also need very large contingency funds, income outside of the rentals, and profitability. Having sizable mortgages on rentals reduces the likelihood of profitability.
I don't have enough points to leave this as a comment. But have you looked at the 1031 exchange? This could potentially allow you to sell the PA/NC houses and purchase a rental property closer to where you live.
I would also advise you to post your question on Bigger Pockets as the website has a Real Estate forum where other investors, CPAs, can give you suggestions.
Lastly, I would recommend you not to give your hopes on being a rental property investor. Sounds like only your portfolio needs to change.
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