Sell Condo or Use Equity?

I was wondering if anyone would give me some advice on a property I currently own. I own a condo in a great area of nashville with about 100k in equity. Should I sell the condo and purchase a small condo near there that is 118k? It rents for $700/mo but much lower price appreciation compared to this bigger, nicer one I currently own.

My question is it better to have a property free and clear or should I just refinance and pull out equity to buy one?

What would be the purpose of buying the second property? I certainly would not pay $118K for a rental property with gross rents of $700 per month.

Mike

Well, its just a nice area of nashville where there is a ton of demand to live there but not affordable. I expect that the rents will increase over the next few years and just collecting checks on a free and clear property sounds like a good idea. I do agree the return is not unreal but an 8 % return with an at least 5% appreciation a year since its such a desirable area seems like a good idea and with no debt. Little risk and good reward.

I can envision propertymanager’s fingers reaching for the keyboard…

…something about numbers…

LOL…you got it, Land Baron. As “crumudgeon-y” as he can be, he’s right on the money. This is a terrible “investment”!. If you invest $118K, how are you going to get 8%?? $700 a month times 12 months is $8400. If you divide that by the $118K, the return is only 7% AND you still need to deal with taxes, insurance, vacancy rate, damages, CONDO FEES, etc., etc…

You’d be better off taking your money and putting it into a high interest CD at about 6%!

…and BTW, putting money in a losing property hoping for “at least 5% appreciation” is not investing, it’s SPECULATING…

Keith