Would you take the 200K and run? Or wait for more appreciation?

[Nikki Closser]

Hi! So curious what you guys would do in our position.

We bought a house in Seattle (White Center) five years ago and it has appreciated around 200K so far. Each year, we spent a few months in Michigan and we Airbnb’d the Seattle house while we were gone. We did so well with it that when we moved back to Michigan full-time this January, we made the Seattle house a full-time Airbnb. We had it booked 90% of the time and then Covid hit and they all canceled. Then, bookings came back up...but, then the protests started and we are back to zero bookings for the entire summer.

We are in the process of looking for flips and buy and holds here in Michigan to go full speed ahead with investing and we are looking at all of our options.

We can:

1. Get a full time renter in Seattle and break even after paying a property management company. Side note, we were cash flowing over $1000 a month doing Airbnb, so making zero cash flow isn’t as fun. 

2. Weather the Airbnb storm and pay our mortgage out of pocket for a few months (hopefully, that would be it). 

3. Sell it and take the 200K and put it towards a new primary home since we are looking for one anyway. 

4. Sell it and take the 200K and invest in multiple homes here in MI to flip and BRRRR.

Obviously, the house has a history of amazing appreciation. But, it makes me wonder if we could do more with the 200K than maybe it would appreciate in the long run. Seattle has such great appreciation typically, but with so much turmoil happening, it’s making me wonder. My gut says we would be crazy to sell such a great long term appreciation home, but also, if we sell now, we don’t have to worry about 1031 exchange or capital gains. 

Ok, just wondering what you would do??

[Taylor L.]

I would sell and invest that $200k in properties that will cash flow with long term tenants in a more stable market. Your part of MI may or may not be stable, I am not an expert on MI.

I recently talked with a full-time passive Short Term Rental owner. He lives outside the US and remotely manages his STRs. One of his keys to successful STR investing was only buying properties that can also work as long term rentals.

If your current property doesn't produce cash flow as a LTR after paying a PM and maintenance and cap ex reserves and vacancy, then cash in on that appreciation while you have that sweet, sweet capital gains tax exemption (terms and conditions apply, talk to a CPA about whether you actually do qualify in your specific situation).