Bought properties during the last crash. What should I do now?

[Oliver Martin]

Hi everyone. I’m a conservative investor and I’m trying hard to be disciplined during this hot sellers’ market. One thing I wouldn’t do is sell high and buy high. I’d be cautious too about pulling equity through heloc or refinance to buy another rental property at this time. I did this couple of years ago when there were still good deals here and there, but wouldn’t do it now due to the different market situation at this time. The numbers may work but the risk also rises exponentially. I can’t keep taking risks and expect to win each time. It only takes one or two big mistakes to neutralize what I’ve accomplished through hard work and luck in the last decade. It will be hard to repeat the same modest success I’ve had due to that last housing crash being only once in a lifetime. Although a smaller type of correction might be a possibility in the near future.

I bought my first house in 2006 and foreclosed it in 2008. I don’t want to repeat the same mistake again. Yes, buying at the peak is not a good idea. But no one knows for sure until it already happened. I finally got it right the second time around when I bought houses and condos here in Las Vegas from 2012-2014. Three of which are free and clear. And the other two have significant equities.

Selling a couple of houses now is a great idea too but what will I do with the money? Waiting for a correction is a gamble. If the housing market ends up not having a significant correction and price keeps going up and stabilize at a higher price than when I sold the house then I’d be left holding cash not knowing what to do with it (yet). If it does have a correction in the next few years, then that money will accelerate my path to greater financial freedom or increased passive income. I don’t see myself wanting to own dozens of highly leveraged properties. Having around five (or maybe up to eight) houses is my threshold before it gets too stressful for me. I manage the properties myself and I like to save the property management fee and allocate it towards repairs instead. Having 5 (maybe up to eight) free and clear houses in good locations and good tenants, and continue working my full-time job with no pressure to do overtime or with the possibility to retire early, and travel more or spend quality time with my future family would be an ideal goal for me.

What would you guys do? Or to those in similar situations, what are you doing?

1. Roll the dice one more time. Sell everything and wait for a correction? Extreme move but could be a life-changing decision.

2. Sell one property with the capital gains tax exemption. Hold on to the cash and wait until the market cools down.

3. Not do anything. Keep all properties that are paid off or with significant equities. Save cash. Be patient and buy when the market cools down or if/when a correction happens.

4. Option 2, plus sell one less desirable property and 1030 exchange with a better property even if at high value.

5. Other options? Comments?

Thanks for reading.