Selling My Home and What to Do with Cash

[Cody DeLong]

My wife and I are selling our house and buying a new one. Because of the way this happened and our very tough market (where we live) we decided to get approved being non contingent on selling our current home in order to lock our new home in. It’s a lateral move financially, same price as we’re selling for but 10 min down the road and bigger. Our plan if we do not double close is 5% down and then refinance in 6 months with our $100k in equity we will have from our sale.  This will raise our payment up $700 from what it is now but after refinancing we'd be back down to below our current payment.

However I was thinking, would we be better to invest even $60k of the $100k into another rental property and use those returns to pay the difference in payment that we're seeing plus a little extra. I own an 11 unit, two duplexes, and a single family that are all rented or being finished and ready to rent, so I'm not green to the rental market or rehabs. Also my units are about 45-75 min from me so its a different market. I'm just thinking if I can get 10-20% COC and rates are down right now. We would be able to probably make out pretty well. $100k is $500k in buying power. Or even more if it needed a little work to increase rents and rehab as tenants move out.

Luckily we'd have 6 months to decide before we can refinance and the market is about to start churning out some more buildings.  I almost feel like the best move would be to find something in a B area instead of my usual C just to be on the safe side.  ANy insights or people that did the same exact thing would be grateful!

[Calvin Ozanick]

I think I would always lean on the side of acquiring more units. Unless you truly need to lower your payment on your house, I would just say keep adding more. This way, in 20 years when those properties are paid off, you have 2 more properties which are 100% equity and can be sold for exponentially more profit. However, if that 700 extra per month puts you in a bind or makes your current situation more difficult then I would refi and take your time on the next unit. Real estate is all about finding your comfort zone, you have to decide where you fall on the spectrum and work with that.