Should I Sell My Investment Property?

Matt wants to know if he should hold onto an investment property or sell it and be nearly debt free.

QUESTION: Matt has a piece of investment property that has increased by $30,000. If he sells the property he can clear $100,000 and can pay off his $65,000 in mortgage debt. If not, he can still be debt free in five years just with his current cash flow. Which should he do? Dave answers the question with a sunk cost analysis.

ANSWER: If you wouldn’t buy this investment again, then you shouldn’t keep it. You should only keep it for where it’s going in the future. Ask yourself if you didn’t already own it and had that amount of money in your pocket, would you go buy it? Your answer would be yes. But if you were completely debt-free and knowing what you know now, would you go borrow against your personal residence to do an investment deal? Dave’s answer would be no. But by keeping this property, in a sense, you’re doing that every day.