Ridiculous Appreciation!! Should I SELL NOW OR KEEP as RENTAL?

[Jimmy Ho]

Hi all,

Recently I just realized one of my rental properties had a ridiculous appreciation in just 2 years. I purchased the property "A" in 2015 and in two years my current property has appreciated 100%! The current rent is also 2.5x what I'm paying in P&I. I'm currently don't know what I should do! 

I do understand that cash flow is king and appreciation is queen. I'm currently working full time and just bought another a rental property "B" this month and planning to renovate the property "B" this weekend (July 4th). I don't know if I sell the property "A" what's the possibility of me hitting/ finding a property like that again.

If I do sell property "A" I don't know if my DTI will let me buy another property for investment. Buying property "B" this month they used my rental "A" as a source of income as well.

What would you guys do if you guys are in my shoes. I do greatly appreciate all your input. 

Thanks,

Jimmy 

[Michael Swan]

Hi all,

Personally, I have 1031 exchanged in 2015 and 2016  all my pricey San Diego single family properties that have also doubled in value.  I too believe the party can only last so long.  

However, more importantly I have traded in approximately $5,000-$6,000 a year cash flow for apartment complex path to financial freedom.  I have gone from $60,000 cash flow per year to our current $120,000 cash flow and rapidly rising every year.  I expect to be earning over $200,000 cash flow in the next 12 months.  I still have a pricey condo left here in San Diego that I purchased with about $34,000 down in 2011 for $116,000 and am putting up for sale for $270,000-$290,000.  I will trade that $5000.00 cash flow for about $20,000-$24,000 cash flow per year for a 24 unit apartment complex in Ohio.  

I started with 10 condos purchased in 2011 and 2012 in San Diego for the true Multifamily Apartment complex business model. Since 2015 I have forced appreciation on 6 apartment complexes and increased the value of the apartment complexes approximately $400,000 in the last 18 months. Those pricey condos in San Diego all had HOA fees that I had zero control of. I would advise all that have incredible appreciation to read Multifamily Millions by David Lindahl, Loopholes of Real Estate by Garrett Sutton, and listen religiously to a podcast called Lifestyles Unlimited Inc. based in Houston Texas. The founder Del Walmsley has been doing the Multifamily business model for over 25 years and listening to his podcasts and going to his 2 day workshop in Houston was life altering for me, when combined with that amazing Multifamily Millions Book and Loopholes of RE book too.

I love how apartment complexes are valued primarily by the Net Operating Income and is not at the mercy of comps.  I have the ability to manage my property manager to spend wisely and increase the money coming in by providing the best product, best service at a great competitive price for my tenants.

Now I presently provide value for 86 residents and realize that soon it will be 109 residents on my way to over 1000 residents.  I also know the rule that you are paid based on the value you provide.  By having 1000 front doors in the future I will be providing value to over 1000 residents and by providing value to more people, I get greater tax deferred cash flow on my way from current cash flow $120,000 to $750,000-$1,000,000 cash flow per year.

The single family business model won't get me there.  Plus, could you imagine having over 100 single family.  That would be 100 roofs, furnaces, hot water heaters, plumbing, AC, garage, driveway, insurance, etc....  There comes a point where the natural progression is to move to  true Multifamily (5 units or more in one complex) and eventually have two or three 300 or greater unit complexes.  

Swanny