Need advice - what to do with my properties?

[Alex D.]

Hi BP community. I’m hoping I can describe for you my situation and see if you agree with what I’m considering doing. Any feedback and advice is welcome.

I have been buying rental properties for about 15 years here in South Florida. I bought everything all cash and own it all outright. The only debt I have is a HELOC for $350,000 (which is actually no longer using my home as collateral but a brokerage account at the bank that issued the HELOC), on which I pay the interest only each month at a quarter below the prime rate. We live purely off the cashflow from the properties and only since joining BP have I realized that I could probably be making a lot more money each month. I'm considering selling several of the properties below and I think I'm going to go the turnkey rental route in the Midwest, or Memphis, or Birmingham, or any of the places often touted on here as great for cashflow. My only concern is attaining the greatest cashflow possible passively, whether that be Memphis, Alaska or Pitcairn Island. I'm also open to lending, crowdfunding...wherever the best passive cashflow is.

Following are the properties I own, what I paid for them, and what I receive in rent. I pay 10% in excellent property management for all of them. I would love to know which ones you would sell. By the way, I am also toying with getting into leverage for the first time. Maybe just with $100,000 of the money spread over three or four properties to start with and see how my risk aversion takes to it. Although I have no income to show the lenders other than the substantial rental income and a large sum growing in an index fund, so possibly multiple mortgages would be difficult to acquire. Also curious if anyone thinks I should pay off the $350k HELOC.

Property 1 – house and cottage:  Paid - $618,000. Rent coming in - $4700

Property 2 - SFR: Paid - $625,000. Rent coming in - $3225

Property 3 - SFR: Paid - $745,000. Rent coming in - $4000

Property 4 - SFR: Paid - $729,000. Rent coming in - $6300

Property 5 – Fourplex:  Paid - $675,000. Rent coming in - $5300

Property 6 – Commercial:  Paid - $1,000,000. Rent coming in - $12,400

I’m inclined not to mess with properties 4 and 5, and certainly not property 6. But if you think 4 and 5 should be improved on, let me know. But properties 1-3 I think really need replacing. My reading on BP tells me that the 1% rule is quite attainable out of state, so the rents I’m getting seem unacceptable. I can’t lose all that cashflow at once so I would probably have to do it one at a time, though having said that, if I decide to switch them for turnkeys out of state I wouldn’t want to drag it out for 2 years. I’d kind of like to get it done quickly. Also, perhaps it’s better to approach turnkey companies with a large wad of cash and the ability and desire to buy multiple properties at once? One other bit of information...in the next month or two I will receive an approximately $500k inheritance to add to the available funds for turnkeys or other cashflow sources once I sell properties. My head is totally up in the air with all the possible options. Would love some BP clarity to help suggest a path or paths for me that would lead to the best passive monthly cashflow. Thanking you all in advance.