next move- to buy and sell

[Pam Ryan]

We are newly empty nesters supporting one child still in college and looking for options to buy our next investment home to rent, short or long term. We live in so cal and want to be close to our kids. We have currently 3 properties:

our primary single family home, almost paid off with abut $750k in equity; plus $185k heloc with $115 to spend;

a $1.3M vacation home in Hawaii that we've been fortunate to have a 6 mo long term rent during covid, $100-200k equity, and a great track record for airbnb (when it comes back);

a great one BD condo (with huge HOA fees) in urban downtown area with water views with long term renter that we are just breaking even mo to mo and about $125-150k in equity; $500k value, $200k mortgage still due

We want to buy more properties to rent both short and long term depending on markets.  We are open to many markets but leaning towards so cal, Palm Springs, Florida (to establish residency to ease ca tax pain).

Question is, should we try to sell the primary home or condo to reap the cash and buy more units/homes faster?  We have $100k to invest without it, plus the $115k heloc but concerned about the payments.  We want to buy further south with a view.  

Any suggestions would be appreciated!  

[Hilary Stalder]

Hey @Pam Ryan, I'm no expert, but I would say you should sell the least performing asset. Sounds to me like the urban downtown condo may have a great view but isn't performing the way it should. Sell that to free up some capital. 

The Hawaii property sounds like you've found a way for it to perform even in COVID times, which is impressive. I would keep the properties that are performing and ditch the ones that aren't. 

By Florida standards (at least central Florida) you have enough cash to buy a place here (with a mortgage) and renovate for an attractive rental property. As long as you're conservative with putting aside repairs/cap ex/vacancy money, the mortgage will help your position (as it's more to write off during tax season). 

It may be a different answer if you're strictly trying to buy all cash. That may trigger the sale of your primary if you're trying to downsize/free up some capital.

Hope that helps!