Sell or not sell? Los Angeles, CA area.

[Allen Wu]

Hello BPers,

Due to recent rise in the market, I wanted to run the potential options to see what other “long buy and hold investors” are doing. What are your thoughts on potential strategies below? Appreciate your input!

Background/Note: I bought this 1 bedroom, 1 loft, 1 bathroom, and 2 parking spaces condo in the Pasadena, CA area. Purchase piece was 300k and now a recent unit sold for 500k. This property is on a 20 year loan, I’m paying 3.37% and it’s costing me $300/month. Bought back in 2014. Refi made it into negative cash flow, was paying 4.126%

Potential Strategies:

1) 1031: I was thinking about 1031 this to 2 single family in San Antonio area. A or B class areas that cash flow.

2) Just Keep It: I know this area inside and out. So, my thought is to just keep it, eat the $300 a month and ride the appreciation train since this area has done well for me.

I’m leaning towards #2 but it’s not cash flowing. It should in 3 years? I’m up on equity though.....

[Dan Hunter]

@Allen Wu

@Allen Wu

It’s costing you $300 because of a cash out refi. What would it be making you if you didn’t take out the equity? Also, if it was a 30 year loan instead of cash out refi-ing into a 20 year loan, that would have helped to not force a negative cash flow property.

I wouldn’t judge the property based on its negative cash flow because it is only negative due to the choices made in refi.