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Updated over 10 years ago on . Most recent reply

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Britnie Daugherty
  • Lexington, NC
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To sell or NOT to sell????

Britnie Daugherty
  • Lexington, NC
Posted

Hello out there in real estate wisdom cyber-space! We need some advice on a opportunity that has presented itself.

We have been in the rental business for two years and have two rental properties. We have lived in our home for 10 years and have outgrown it. When one of our properties came open we had considered selling it to pay off our business debt. Thinking a little more on it, we realized that if we were to sell OUR house it would pay off ALL of our debt; business and personal. So, we moved into our rental and listed our house for sale.

We have had lots of interest in the house for sale but only one offer (WAY too low) so far. It has been on the market for less than 2 months The home has a lot of equity built in. We owe $58,000 (at 3.9% interest) on it and the monthly payment is only $470. We could rent the house for $800 with NO problem but could really ask $1500 for it. Right now, the income from our other rental is paying the bills for BOTH rentals and we are paying the bills for the house that's for sale.

Here's my question:

Do we sell the house and pay off our debt or do we rent the house??

Most Popular Reply

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Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
19,447
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Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
Replied

@Britnie Daugherty Right now, is the time to exploit leveraging.  You have equity to access...go get it...and turn it into something more.  Paying off debt is what you do after you've leveraged your assets into a duplication of those assets.  You are correct in questioning if now is the time to have no debt.  Now is the time to take advantage of "good debt".  If your tenants pay off all your debt, and other expenses, and part of that debt is turning your equity into cash that you can invest and grow (thank you Mr/Mrs/Ms tenant), then go for it.

Take it a step further.  Any new use of that cash, as long as it was invested in another cash flow property, from the refi can also be refinanced out of that property, for use on another property....and so on, and so on and ...

If you take a closer look, you never actually are spending the money (cash from 1st refi), you're just using it over and over again.  In the end, when you refi it out of the last house you decide to buy, you get it back...never having spent it.

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