Should I sell my L.A. home?

Question

I am debating if I should sell my current home, realized strong growth in equity in the past 1.75 years of owning it, amounting to $230,000 - $380,000 (low sell / high sell - according to my thorough research). I would sell at the 2 year mark.

If I sell now I would wait patiently and rent for about a year and see if I can:

1: Capture another solid deal on my home

2: Purchase investment property with excess cash to Buy/Hold, Fix and Flip, or Rental

Any thoughts on what you experienced RE individuals would do?

Matt R. · Answer

Not sure which school district you are in but LAUSD has open enrollment if you want to drive for the best one nearest you. As far as re entering at a lower cost effective plan...maybe but not likely considering many forecasted factors. See Matt Masons post for the more common reality there.

Marcus Millicap latest report.

Los Angeles is up 11 places in the firm's ranking from one year ago based on a forecast for further tightening in apartment vacancy and minimal supply growth. Meanwhile, prospects for continued robust job growth moved Seattle-Tacoma and Boston into the second and third spots.

Minneapolis-St. Paul was the highest-ranked Midwest metro, while former hot tech markets San Francisco and San Jose dropped from the top of last year's ranking as their growth cycles mature. NYC's apartment market rounded out the top 10.

Below is the latest from Oxford (UK) researchers.

Keep in mind LA is #1 nationally for total sfr returns ( cash flow plus equity) since 2000. I realize your personal home is not exactly a 100% investment but this reality still exist just owning personally.

Lastly, are you a well thought out longterm investor or short term speculator?

Good luck!

Matt R. · Answer

Understood. If realizing capital today enables further planned out profits...thats is a go no doubt. And just another great option for having first invested in the most profitable real estate market on the planet available (on average) .

Good luck!

Lucas Allmon · Answer

Why do you need to sell it to do that? Could you not cash out refinance if you need to tap some of that equity gain to put into other assets?When you sell the cow, you sell her milk too.

Andy P. · Answer

My house meets my needs to a certain extent, the school district is not the best and will most likely need to invest in schooling for our children which is a sizable investment in the short to long term, if I were to move to a better school district than this cost would be avoided for a certain period of time. Size is decent, could do with one more bedroom and our floor plan although good is not ideal (not really a big deal).

We could swing renting it out but would need to work out the numbers. Does anyone have a link to a thorough analysis for renting a home?

Andy P. · Answer

@Jim Blackburn - thank you for your input and I am with you, LA seems to be a BUY/HOLD market. But, there has been such a rapid expansion in housing prices over the past 1.5 years, especially in my area, it's mind boggling. For example, last month a 1,400 sqft  that is practically a full home reno, with a small lot and no view, sold for the same price that I bought my new construction home at 2,300 sqft which has views and significantly larger lot and much better finishes...?!

I know this is a "what if", yet it seems logical... Do you think that at this point in time with interest rates rising and other potential domestic and world economic influences we could be seeing a correction in housing prices soon?  If so, wouldn't it than justify selling and utilizing the cash to buy in at lower pricing and getting into the investment game without the necessity to leverage with large amounts of credit? At the end of the day isn't the investment games end goal typically Buy Low / Sell High or Rent High... I feel that in order to see significant growth gains on housing from current levels, it will quite a long time before we see further growth...

Shawn Ward · Answer

@Andy P. I totally understand your thought process. Two options that will put your equity to work, but also scratch that investment itch you are having.

Plan A:

1. Refi Your house

2. Put your equity toward fix and flips to generate income. Def Partner with someone who's seasoned

(The money you make from flips will surely outpace the extra mortgage payment you absorb from your refi)

Plan B:

1. Sell your place

2. Buy a nice duplex that you can house hack and add value

3. Once you are ready to move, rent out both, and buy another nice spot

Onwards!

sjw

Alex J. · Answer

refi cash out 100k,will change your payments modestly maybe 400  amonth, put that 100k into something that can generate a better return for you... i would look to cali muni bonds, tax free, monthly payments if you buy something like ticker pcq, and just average into it.  youll have theexposure to cali,rental income feel since its monthly distribution, and you wont need to lift a finger for maint.

Should I sell my L.A. home?

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