Sell v/s Refinance - Bay area

[Sid Naik]

Fellow BPers ,

Bay area prices have started correcting .

My condo is 15% off April high . From 700k in April 2018 to 595k now .

Inspite of that I still have 300k equity and am faced with the question sell or refinance and have 15% COC return for the last 5 years ( in equity ) . Breaking even on cash flow .

I  want to go the cash flow route in out of state .

looking for advice to choose from below options .

1) Sell to cut further losses  and pay taxes and put money in CD for 2/3/4 years and then invest into cash flow properties out of bay area whenever there is RE correction all over . I believe NY, california leads the charge and soon the impact should be felt in many markets .

2) Keep the property and refinance during recession . My equity would have been further reduced but I can pull $$ from my other property as well . The negative cashflow which I will experience from california property will be made up by the positive cashflow in out of state property so I am thinking why do i need to sell ?   This way even if bay area property market starts recovering due to low interest rates i will still be covered .

[Amit M.]

3) plan on getting a heloc for dry powder, as you pay no interest unless you start using it. Keep the condo long term, as it will go up in value again with the next Bay Area appreciation wave, and the rent will go up too, and then you’re cashflow positive, have tons of equity, all with a blue chip asset. An enviable position indeed.

Don’t forget this: