Cashflow Come & Go (San Tan Valley)

[Laura Au]

Rental market in San Tan appears saturated in rentals. Seems SFR rentals raised from new home built in the area in past few years. Houses appreciated, however, cashflow is depleting. In this type of market, what are the exit strategies for this type of markets?

Also, when is cashflow to be enjoyed as profit taking when property keeps consuming cashflow. Seems rental is now liability rather than asset with equity.

Looking for suggestions and recommendations for situation and investing strategies. Thanks.

[Mason Weiss]

Quote from @Laura Au:

Rental market in San Tan appears saturated in rentals. Seems SFR rentals raised from new home built in the area in past few years. Houses appreciated, however, cashflow is depleting. In this type of market, what are the exit strategies for this type of markets?

Also, when is cashflow to be enjoyed as profit taking when property keeps consuming cashflow. Seems rental is now liability rather than asset with equity.

Looking for suggestions and recommendations for situation and investing strategies. Thanks.

 Some rental properties do become liabilities instead of assets. It's important to understand if this can be corrected or if you are putting off the decision to lose the liability which only costs you more time and money. Talk to other investors and RE professionals and get their input so you can make a well informed decision.

[Jackson Harris]

I think some of your exit strategies could be to reposition and add some unique features to your rental to attract more renters and potentially drive a higher price, 1031 exchange and move it to a different area or even market. Diversifying your portfolio can protect you in the event that 1 or 2 markets you invest in are losing cashflow or even worse - failing.

My theory is to keep your money invested as long as you can and don't take that cash flow for profit. This way you're building equity as fast as you can in order to utilize on your next investment. Obviously that stance is different for everyone, maybe just take some of that cash flow as profit and put another portion back into the property. 

[Laura Au]

Thank you all for your replies, recommendations and advice!

[Henry Lazerow]

In over 90% of cities for 2024 rents are lower then mortgage payments and that is not even counting cap/ex, etc. It's how it is.