Buy and hold investors, did you sell to move forward?

Buy and hold investors, did you sell to move forward?

Investor · Morehead City, NC · Member since 2015 · 99 posts · 32 votes

I'd like to hear from buy and hold investors as to whether or not you've sold property to move your portfolio forward and looking back was it the right decision? I posted some details of where I am at with REI. My goal in the future is to invest in apartment complexes of 30 or more units. I currently own two single-family rentals, and live in a REO that I bought a year ago and have renovated. I keep going back and forth on selling a house to free up capital for another investment, two, or three. I hear stories about how investors always look back and wish they didn't sell any properties, but my DTI and lack of cash is bottle necking my efforts of keeping this training running. I can probably HELOC my primary residence in the spring, but the last time a tried my DTI was too high, so I'm doing the driving 2007 Yaris and foraging for food in the wilderness thing to pay down debt. I have 27k of debt in total besides mortgages: student loans, small car loan, Lowes Home Improvement, and few credit cards. After reading The Millionaire Real Estate Investor by Gary Keller (Which I put off for a while because the title seemed hokey), I've started keeping a net worth spread sheet, which got me thinking, "How can I best leverage my equity to grow."

House 1- Primary REO 112k of equity. In June, I will have lived in the house for two years, I could sell and not pay taxes.

House 2- Single-family rental. Mortgage is 98k, appraised at 144k a month ago. Rents for 900. Lived in it 2 of the last 5 years, so wouldn't have to pay capital gains.

House 3-Single family rental. 5 years left on mortgage. Owe 25k. Rents for 700. Have had a long-term tenant and need to raise the rent to market 800. I haven't had it appraised recently but comps sell for 95-125k.

So what strategy would you use to move forward from here?

Thank you for your feedback in advance,

0Reply
28 views

2 Replies

Jump to latestLatest
  • Investor · Mountain View, CA · Member since 2013 · 94 posts · 42 votes
    10y

    @John Suralik I sold three properties and 1031 exchanged for properties with much higher cash flow. My life is much more complex now (sheer number of units to keep track of), but we are feeling quite good about the choices to sell. I'd keep in mind two things. The first is the high transaction costs in real estate. You will bleed money for a while in fees, appraisals, notaries, real estate commissions when you sell. Make sure your plan anticipates losing 8% of the sales price to this transaction cost. The second is that as you grow you'll want higher cash reserves and a would prefer to also have a cushion of available credit . Improving your DTI, and getting HELOC might be good steps. As you grow, keep an eye out for not spreading yourself so thin that you'll give back properties in a downturn.

  • Investor · Morehead City, NC · Member since 2015 · 99 posts · 32 votes
    10y
    Natasha Keck thanks for your experience.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.