Insight Needed: Considering Selling Multifamily

[Edmond J Daugherty]

Hi all, we bought our home Oct. 2017 and overpaid in NJ (Gotta love taxes baby). It's a mother/daughter, did some work to it and rented out the upstairs (we live downstairs. owner occupied). We have consistently added money into the home and have made big improvements recently (Redid both kitchens, tenant turnover and separated hot water with a new heat pump water heater for downstairs) Anywayssss, sorry for too long of a post already....please see purpose of asking below.

I would like some insight from those who have more knowledge than me:

-Since NJ is ridiculously expensive considering selling our multifamily and starting over in PA (especially since in my view we overpaid)

-I'm curious what most think related to how big housing market may collapse due to COVID?

-Our family is growing so considering getting a single family in PA (farm, taxes much cheaper, mortgage much lower) and using cash (if we make a profit) to buy turnkey multi families out of state.

-Also wondering if the rental market may get saturated in the future too?

Would love any insight anyone has.

Thanks,
Ed

[Evan Polaski]

@Edmond J Daugherty  I cannot speak to NJ, so take my comments as in general:

I have a duplex in Cincinnati that is under contact for $15,000 more than an identical property 2 doors down. At the moment, in Cincinnati, I have not seen any fall out from COVID.  Will the strong market persist?  I don't know.  There are 4mm borrowers in forbearance right now, so we will have to see how true unemployment looks when all stay at home orders have passed and we enter the new normal.

To me, having the lowest cost of living possible for your desired lifestyle is always better than living paycheck to paycheck.  If it makes sense for you and your family, a less expensive property in PA could be a great choice.  Of course, employment, commutes, budget all weigh into this decision.

There have been some people I have spoken with that have had great success with turnkey properties out of state.  There have been some who would never touch them.  I have always invested near where I live.  You are paying top dollar for a turnkey property, and you are reliant on your manager.  I have never had success with 3rd party management on my small portfolio, but others have.  Quite typically, I see people here under reserving for capital items.  Just because a roof is new, doesn't mean it won't need replaced eventually.  You can either save now for it, or you can scrap together cash later for it, but either way a new roof doesn't mean you won't have expenses related to it.

I see some areas with rental market saturation.  This tends to lean towards the large scale properties, where you have 1,000's of units in close proximity.  It could happen, but as a whole, I don't think there is over saturation. The US is at about 6.6% vacancy (https://fred.stlouisfed.org/series/RRVRUSQ156N) At the end of the day, I have always offered a great property at a fair price and never had trouble renting any of my properties.