Hold cash or buy a rental

[Ariel Goldenberg]

So here's the dilemma:

We are selling our rental property and expect to profit about 250k.

Should we roll the profit to another rental and buying in a market that is maxed out but - deferring tax payment-

Or - absorbing the tax (it's in CA so it is around 25%! ) and waiting on the sidelines ready for the cycle to change. 

I know it is really depended on our personal situation and objectives and the reality is more complicated, but still interested in hearing your opinions.

Thanks!

[Craig Bowen]

Hey Ariel,

Just my two cents....you can use that money in a more affordable (read less risky) area of the state or even out of state.  When I bought my last couple of deals in 2006/7, thinking that whatever problems were about to happen wouldn't be quite as dramatic as they turned out to be, little did I know I could have spent that money where I live now in South Carolina and weathered a much calmer version of the storm.

Bottom line, $250k goes a lot further in just about ANYWHERE other than San Fransisco!!  But I love the city!

Best of luck whatever you decide.