I am buying a house to rent out, when should I sell it?

I am buying a house for about $157,000. At Zillow.com my zestimate is about $173,000. The house was built in the 70's. The neighborhood is not one of the better locations. I'm using this property as a start off house, so I can make a profit and afford to buy better houses in better neighborhoods. My question is: After I buy it should I hold on to it until it makes a good enough profit or should I just keep it until the mortgage is paid off? I know real estate is really low now and if anyone has some insights of when it will pick up, that would be great too.

Answers:
If you are buying the house and not going to live in it you can not avoid capitol gains. That law is only for homesteads. You can defer capitol gains using a 1031 tax defer exchange.

I would buy and hold-not sell. You can always borrow against this one to buy your next rental property and your risk goes down the more property you own. (If you have one rent house and it is vacant you have 100% vacancy, if you have have 10 and one is vacant it is 10% vacancy)

Most people buy when investments are at their highest prices because of the excitement, and they sell when investments are at their lowest point because of the depressed feeling. That is just the opposite of what you should do of course. Congratulations of taking advantage of an opportunity!
I would clean it up, paint it, and roll it over at a profit. I work for a lawyer with 32 rentals. With this rise in gas prices they are not paying their rent. We have had some skip out owing 2 months rent, and it cost us over $1000 to clean up, and repair the units. I WOULD NOT depend on the rental income to pay the mortgage. I would stay completely away from real estate.
Once you buy the house definitely make plans to own it for at least 2 years so you can benefit from the taxes. You will not have to pay capital gain taxes if you own the property more than 2 years as long as your profit isn't over 250,000. Real Estate is a great way to make money over the long term. IMO I would make plans to live in that house for 2-3 years and then look at your profit. Renting tends to be a pain in the butt unless you can do it full time or have a management company handle it for you. See what happens in 2 years if you make enough $$$ sell take your profit and roll it into a bigger house. Renters tend to mess your property up and cause you problems unless you have the time to deal with the headaches .

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