Should I sell my fully paid condo?

[John Gardner]

Hey Guys 

I have a quick question, I purchased a condo a couple of years ago all cash, The HOA keeps rising cutting into my cashflow. My question is should I sell the unit and use the 70k as a down payment towards multiple properties? I am only cashflowing $450 on the unit. Open to investing in any market where I can get 10+ percent ROI

Thank you for your reply

-John

[Jon Huber]

@John Gardner $450 cash flow isn't so bad, however, you're not paying a mortgage. The question is, if you had that $70k, have you found any properties that you can purchase that will give you 10% ROI? By my calculations with some rough estimates (and general assumptions without knowing your situation/credit score/etc)...

You could purchase a property for $300k (Taxes $3,500, 4.5% interest, 30 year fix, 5% vacancy, 5% repairs/main, 5% CapEx, 10% Mgmt), using 20% down for 60k deposit, and the remaining $10k for closing costs, repairs, etc.

You would need income of $3,200.

Monthly payment= $1,793, Monthly reserves= $800, Total Expenses= $2,593, Cash flow = $607.... 

Cash on Cash ROI= 10.41%

I would try to find this type of property before selling. If you sell, and you can't seem to find it, your money in the bank will be earning you -$450 more than it's earning you now. You could REFI/HELOC, extract 75-80%, and use the $50k instead of 70k, and purchase something. Mortgage on a $70k purchase price with 80% LTV should be around $600. You may have to slightly raise rent to compensate the HOA increase.

... and then you would have two cash flowing properties

Just an idea.