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Updated about 4 hours ago on .

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Jake Young
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3
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Need advise: sell new construction or rent out?

Jake Young
Posted

I finally finished building this nice little 1000sqft, 3 bed , 2 bath house on Big Island Hawaii.  It is in small town of Milolii on south end of the Kona Coast and I could list it for about $600k.  I owe zero dollars on it as I put the $200k material cost to build on a remortgage of my primary Alaska house. Bumped mortgage from $170k to $370k.  I did all the labor my self aside from hiring certified electrician and plumber as per country permit regulations.

I live in Alaska with my family and work in construction in general (journeyman carpenter turned commercial superintendent turned GC and now rolling steady as one man 'handyman' doing lots of finish work the last couple years). I'll be 45 next month.

option A) Kiyosaki Model: Don't sell and run either long term or short term rentals through it for a year to show income on the property than pull a $300k mortgage on it to build another house in the same neighborhood... repeat

option B)  Ramsey Model, Sell it for $600k. (assuming market does not crash etc). Turn around and put $300k back on primary residence mortgage and use the remaining $300K to finance the next house.  

This time though I will be ahead of the curve in terms of not having to borrow from the bank.  Sell second house within a year, pay off remaining primary mortgage, build third house.  

sell third house this time dump half the profit into SnP 500 index fund, other half builds fourth house... repeat until satisfied with stock portfolio, retire at 50

option C) Aggressive model: sell house for $600k just keep carrying my primary mortgage which is $2900/month and dump the money into 2 properties and build 2 house at once that would each be worth $600k...?  sell the both at once and have a cool million to work with for next stage...?

option D) Ditch hawaii for now and use $2-300k to pay down primary mortgage and use remainder $3-400 ish as down payment on cash flowing $1.5m 10-20plex in Anchorage.  Goal would be to net cash flow $10k/mo and effectively replace my hourly income . I have found some deal and crunched the numbers that seem alright.

Pros/ cons. Building in hawaii is a lot of solo labor in the heat which I actually really enjoy but away from the family .  Gives opportunity for large chunks of capital to work with and stay free of the banks but at mercy of the market which I suppose we all are either way. It is very simple model with little interference from pesky renters. Though in theory, cash flow $10k/mo with out really working sounds appealing.

I feel like I will be 65 sooner than later and have zero retirement saved otherwise. I need to make some smart power moves!!

School me on tax strategies within each model.  I can show cost to build as write-off and then 1031 the rest of it?  Do you have to 1031 the whole chunk of profit and not divide it up? 

Thanks!