What would you do? SFR owned outright, hot market, low taxes....

[Carson Wilcox]

OK people.... I would like to lay out a scenario, and see you guys flex your BP muscles and show me the way.  Hopefully this makes sense... if not, let me know.

The scenario.  Sacramento. Grandma's house, may she RIP.  Owned outright, currently a rental, cashflows 5-700 a month.  Worth call it 300k as it sits.  Owned in the family revokable trust, I am co trustee with the mom.  California tax law means when grandma died, we kept her tax basis, taxes are like $650 a year, vs market taxes of like 4000.

The mom has given me permission to explore leveraging that property into more properties... as long as in the long term, call it a year out (max)and going forward, she at LEAST cash flows 500-600 like she is now.  Meaning she is ok with the status quo, and I can play with the asset outside of that..

My goal, and she supports the concept is to buy more, likely small MFH, so that in 10-20 years as I get into college for my kids painbox, and retirement, my cashflow will start really bearing fruit. While in the interim being a good tax instrument and getting reasonable appreciation. SFH's are pretty out. the prices here are ridiculous, and I dont have the time or experience to find and rehab something for buy hold that will be near cash flowing...

SO.  Lets say the accessible equity was just sitting in a bag... how would you leverage that 150k into something else...?  I have great credit, and personally a reasonable debt to income ratio.... so getting helocs and stuff shoudlnt be hard.

Also, does anyone have any insight in to the issues with a property that is held in a trust?  thanks!

[Bryan O.]

@Carson Wilcox I would consider investing out of state. There are many markets where $150k can buy you 2 properties with cash that will bring in $1,500/month cash flow. If you leveraged, you could do even better.

The challenge in long distance is the investor's mindset. When you invest locally you have to vet the neighborhood, the property, the foundation, mechanicals, roof, etc. When you invest out of state you have to vet the city and the people doing the work. It is less important which house because now you have become more investor, less worker. It is a shift in mentality and control. You will find people on BP get very fired up for one direction or the other, but in reality it is what fits your life, time constraints, and comfort levels that matters.

Regardless, you have an awesome dilemma! I am sorry for your loss, and happy for your gain. Best of luck and happy investing.