[USER]

I have 1 million in rental property . I have started putting the profit off them in s & p 500.

Question is I am more or less 100 % property invested.
I bought one rental for 60k now valued at 130k. This property has no mortgage and is brining in £ 8400 a year pre expenses and tax.

To diversify abit more would it make sense to sell this rental and put the money into s & p 500?

Thanks

[Ian]

The quick answer is yes. The correct answer is we need to know your total return (cash flow + appreciation) rather than your pre-expense cash flow.

Sell decisions are usually based on your RoE (return on equity).

Take your total return, divide it by your equity (130k) and see if your return rate is lower than what you would get in another investment.

If your return is low you sell and redeploy that capital somewhere it will give you a better return.

[Emmanuel]

Would you still recommend property as an investment? I see so many people complaining about being a landlord

[Russell]

You gave the gross rent, but relevant is the net after expenses and tax.

If you went with a dividend fund, 3% is a reasonable expectation. That would be 3900 a year from the 130k invested.

If net rent is less than that, I’d switch.

[Lit]

I would say yes…waiting on one of my properties to reach $250k then sell n reinvest w a financial planner

[Boyer]

If the average rental income over 10yrs is more than the cash today I’d keep it, if the cash is more today, I’d sell.

So $130k / 120mo = $1083/mo rent (or more). You said you make $8400 today which is $700 (forgive me I’m not use to £). Over 10yrs you might barely make my rule to keep it or barely not.

The formula doesn’t include expenses because expenses from renting and capital gains from selling cancel themselves out (more or less). If it’s close, I’d keep it and reevaluate each year using the formula.

What generally happens for me is there comes a point where cap expenses or heavy remodeling is due and the economy or interest rates or something else makes the resale value more favorable and the formula makes clear sense to sell.

I bet in a year or two if the economy turns around (don’t know where you live) interest rates are down, equity is a little higher, and the property now needs a new roof or AC etc.

[Author]

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