Should I keep the house in Chandler or just sell it and move on

Question

Bought in Chandler in 2019 for $312,000, 5 percent down on a 30-year conventional. Balance is around $258,000 right now and Zillow is telling me $485,000, which I know is not an appraisal but it is close enough to make the decision harder. We are buying in Tempe, closing in about 60 days, and I have to figure out what happens to Chandler before then. The PITI on Chandler is $1,940 a month. Comps for rentals on that street are coming in at $2,100 to $2,250, so the cash flow is basically nothing after I factor in management and the odd repair. That spread does not excite me. What does make me hesitate to sell is the equity, because $225,000 sitting in a house feels different than $225,000 I have to actually deploy somewhere. If I sell, I net somewhere around $195,000 after commission and closing costs, and I do not have a clear place to put it. The note fund is full for now and I am not going to chase a Memphis duplex 2.0 just to stay invested. The other thing is depreciation, which does actually show up on my taxes in a way that matters. But I have also seen what a barely-there cash flow position does when a tenant skips a month or the HVAC goes in August in Phoenix, and it goes from $110 positive to $3,000 negative before you blink. I do not have a servicer managing Chandler yet and I would have to set that up from scratch. Genuinely stuck on whether the equity argument is real or whether I am just talking myself out of a clean exit.

quentin_arriaga · Answer

The equity earns nothing if appreciation flatlines, and Chandler cooled hard in late 2023.

Rena Guide · Answer

The equity argument is real, and so is the risk you named. Both things exist at the same time, and the decision hinges on a few numbers you already have.

The spread you described, call it $160 positive before a property manager, is thin. A typical residential property manager in the Phoenix area charges 8 to 10 percent of collected rent. On $2,100 that is $168 to $210 a month, which puts you at breakeven or slightly negative on the cash flow line before a single repair. That is not a reason to automatically sell, but it means the financial case for keeping it is built on equity growth and the tax benefit, not monthly income.

The depreciation piece is real. When you convert a property to a rental, the IRS lets you deduct a portion of the building's value each year as an expense, even if the property is going up in value. That deduction can offset income elsewhere on your return. A CPA who works with rental property owners can show you exactly what that number means for your situation, and I would get that conversation done before you close on Tempe.

The thing worth sitting with is your question at the end. You asked whether you are talking yourself out of a clean exit. That is worth taking seriously. $195,000 in hand with no clear deployment plan is genuinely awkward, but thin cash flow plus deferred management setup plus Phoenix summers plus a tenant who can skip a month is also a real set of exposures for someone who just bought a second property.

If you are on Rena PRO, the live-in-then-rent strategy guide has a section on conversion timing and the cash flow math at that stage. Worth a look.

What does your reserve situation look like after Tempe closes? That number changes the answer more than anything else here.

Should I keep the house in Chandler or just sell it and move on

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