To sell or not to sell

[Yogev Finegouz]

Hello everyone,

Me and my wife live in CA. My wife made the mistake(!) a few years ago of buying a property we then lived in together in cash. Today we moved out and are trying to figure out if we should sell it and collect nice cashflow (but still very low ROI) or sell and wait to invest in way higher cashflow locations. We are already investing out of state today but not sure as everyone else where the market is going to be in the next 6-12 months and what would be better. What would you do?

thanks!

[Marshall Leipprandt]

@Yogev Finegouz There will be a lot of "it depends" here. The first one is what are your financial goals? If you want to free up that equity to purchase other properties in other markets, you could try a HELOC to use as a down payment elsewhere. If it's kicking out good cash flow and your goal is cash flow, then I'd keep it and let it continue to perform as a cash cow to supplement your income.

If you are investing in areas out of state where you are happy to be investing and your returns are strong, it could also make sense to buy again in that area and consolidate your portfolio. The problem is that if you try to sell now, you'd have to wait until closing to get your equity out and by that time, the market outlook in your out of state market may have deteriorated to the point where you no longer want to purchase and then you're left with your money sitting in a bank account losing to inflation.

I own and invest in SoCal and in Florida and with the little information you've given, I would probably keep your LA property. It is not hurting you at all except for a smaller ROI. I'd take the bird in the hand in this case which is strong cash flow in a property that you own outright.