Cashing out in this seller's market...what to do with the Ca$h?

Question

I "try" investing with the knowledge I get from BiggerPockets.   I bought a Vegas townhome cash  in the middle of the RE crash during the GFC of 2008-just as you guys taught.  The Property increased by 147k .  (SIDE NOTE: I lived there & had income using it as a room househack  at first & then a full rental after another RE purchase- just as you guys taught)

Numbers & market say sell the home however, the property is literally 3 blocks from strip, to airport & UNLV-location, location, location-therefore confused on sell/don't sell.

If the answer is to sell then what to do with the money?  I want to go to the next level- I just don't know how.  I would like to know what the Professional Investors are doing & maybe I do the same.

Bill B. · Answer

If it’s a horrible performing rental you give the government $30k and buy a better rental and choose better next time. If it’s performing fine why would you sell? You can get almost 100% of that money tax free with a cash out refi. (You get 75% but save about 25% in taxes.) better to have money tied up in equity than given away to the government. Most appreciation is % based so it’s just s likely you gain more appreciation in the future than the past. (As a dollar amount, not necessarily a percent.) best I can’t tell there’s been about 15% appreciation so far this year. You could have made your same sell argument last year and missed out on that $30k.

Alexander Hogarth · Answer

@Eliza Alexa I would not sell the property, I’d get cash out with a home equity loan or mortgage refinance, dollar-cost-average or buy dips in crypto, use your crypto as collateral on another loan and buy another unit - continue to expand your RE portfolio

Eric James · Answer

You don't sell just because of appreciation. If you're a real estate investor, once you sell, you then have to buy something else at a higher appreciated value.

Nick Barlow · Answer

@Eliza Alexa Refi to get at much money out as you can, while still cash flowing/saving for capex, vacancy, maintenance, etc, and start making offers with the cash.

If you have the funds, buying a house that needs A LOT of work might be a good risk/reward?

Like a different comment mentioned, a good price to have.

Account Closed · Answer

Dividend stocks? Might be an option

Tucker Cummings · Answer

Could you just do a cash out refinance? Capture the liquidity/equity of the asset, buy another property with it, and keep the original property.

Arsen Atanasovski · Answer

What I do with extra cash....... well like Elvis says, Viva Las Vegas!

Greg Pond · Answer

@Eliza Alexa I would consider a 1031 Exchange or Reverse 1031 to purchase a better quality home or multi-family property. Hard to do in this market. Good luck

Gord Collins · Answer

Wow, right next to the strip in Vegas, before Vegas real estate is going to heat up. Imho, I think Eric is right, you'd only sell income property when it's a poor performer, or you need the money for some other reason. If you bought another property, would it outperform the old, plus the tax losses? Sounds like the tax experts don't you can escape taxes, so you'll lose? Congrats though, you made a great decision buying it.

Bill B. · Answer

That’s the problem with cash. I sold an out of state cabin I no longer used. I couldn’t 1031 because it wasn’t an investment, it wasn’t tax free because it wasn’t a primary. Well great.  I owe $60k in taxes (I’ve lived in Nevada so long I forgot MN would come after it’s $20k.) and I have $200k left, sitting in the bank earning $15/mo.

Should I buy in to the stock market everyone says is at a top/bubble. Buy more real estate at “these ridiculous prices”. I certainly can’t sell another property this year without doing a 1031 as it would push me in to “give us all your money” tax bracket.

I may put one one the market in December. The reasoning being…

1) either this insane appreciation continues and I’ve collected more of it

2) appreciation has slowed and I won’t miss s much by selling

3) the sale won’t occur until next year. Delaying tax due date and lowering my bracket.

Before the skyrocketing prices the plan was to sell a pair and 1031 into one dream property that might someday become a primary. The problem is the higher priced the property the more it’s appreciating. The longer I wait the farther away I am. Luckily its a good problem to have. Compare yourself to people who own no homes trying to buy their first. Prices are rising by more than their downpayment every month or two. GL either way.

Cashing out in this seller's market...what to do with the Ca$h?

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