Should I sell the one rental I still have a note on or let it ride until the rate looks stupid
Bought a house in Garland in 2021 at 3.875%, four bed, nothing special, maybe 1,480 square feet. Paid $218,000, put down 20, renting it now for $1,840 a month. After taxes, insurance, and the note, I'm clearing around $310 a month when nothing breaks, which it does about twice a year for an average of $900 a pop annualized. So real cleared money is closer to $235 a month. That is a thin margin, and I know it.
The part I argue with myself about is that the rate is the asset here, not the house. If I sell, I walk into whatever is sitting at 7-something and either the deal pencils at a worse spread or I have to go to two cheaper houses that each need their own attention, their own insurance policies, their own tenant cycles. I already manage nine doors. I am not scared of the work, but I am honest about what two $130,000 houses in Mesquite or Lancaster actually look like, what kind of tenant they attract, and what the cap ex surprise rate is on a 1960s pier-and-beam that has been rented continuously since 1994.
The equity in the Garland house is somewhere around $110,000 right now based on what closed two streets over in March. So I have capital sitting in a box earning a middling return, but the box is protected by a 3.875 that I cannot replace. Every month I hold it the rate advantage compounds forward, and every month I don't redeploy that $110k into something at a better yield I'm leaving spread on the table.
My current lean is to hold it until either the rate environment changes enough that selling is less punitive or I find something that pays me to give up the low note, meaning the yield differential has to be wide enough to justify voluntarily locking into a 7-handle. I have not found that deal yet. The spread just isn't there in DFW right now on anything I want to own.
