When to sell an investment property? (Honolulu, HI)

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When to sell an investment property? (Honolulu, HI)

Sean Sakaida
Financial Advisor · Honolulu, HI · Member since 2017 · 47 posts · 3 votes

Aloha everyone! 

I'm a newbie investor from Honolulu, HI. I was wondering if I could get feedback in a property I own.  I have a condo that I've had for some time. It would be paid off in about 12 years. The thing is that I'm not making money on my condo right now. I'm negative about $120 a month! At that rate when my property is paid off I would be paying out of pocket a little over $17k for the life of the loan. When paid off free and clear I stand to cash flow about $900 though. So not sure if I should hold out for 12 more years or if I should sell it. The real estate market in Hawaii appreciates about 1-3% annually. So I could be looking at big appreciation down the road. It just hasn't appreciated much until lately. Since the market is hot right now in Hawaii, I'm wondering if selling for a small profit. Then use the profit to buy rental property in the mainland. I'm currently under contract on 2 properties in Cleveland OH.

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Royce Talbo
Investor · Kaneohe, HI · Member since 2012 · 218 posts · 104 votes
9y

@Sean Sakaida Why dont you refi into a 30 year? With rates still low you will start cashflowing immediately.  To me it doesnt make sense to be negative just so that you can be 0 debt and cashflow in the future.  Remember there is good debt and bad debt.  You could probably even refi and cash out a little to get some down payment for other properties without going negative.  The reason to refi into a 30yr is so that you have the options to cashflow, break even and pay off a little longer than 12 yrs, pay the same amount you are paying now and pay off in 12 years, or break even and take a little cash to purchase another property.  My personal opinion for Oahu is to never sell unless it is to buy a better property.  

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  • Royce Talbo
    Investor · Kaneohe, HI · Member since 2012 · 218 posts · 104 votes
    9y

    @Sean Sakaida Why dont you refi into a 30 year? With rates still low you will start cashflowing immediately.  To me it doesnt make sense to be negative just so that you can be 0 debt and cashflow in the future.  Remember there is good debt and bad debt.  You could probably even refi and cash out a little to get some down payment for other properties without going negative.  The reason to refi into a 30yr is so that you have the options to cashflow, break even and pay off a little longer than 12 yrs, pay the same amount you are paying now and pay off in 12 years, or break even and take a little cash to purchase another property.  My personal opinion for Oahu is to never sell unless it is to buy a better property.  

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  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    9y
    Sean Sakaida I would be careful with Ohio. The properties tend to be cheaper and seedier than the other turnkey markets. I would not go less than 900 per month for rents. As for when to sell... calculate your return of equity of the two scenarios. If you need help with this share a spreadsheet and I can do the formulas for you.
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  • Isi NauPro Member
    Real Estate Broker · Mililani, HI · Member since 2016 · 217 posts · 253 votes
    9y

    Aloha @Sean Sakaida

    I'm assuming the unit is a 1 or 2 bedroom in town?  If you have $100k in equity, you could exchange the property for a duplex on island and net $200 a month.  Nothing too exciting, but that would be a $320 swing in cash flow from your current situation.  That way you still have your hand in the Hawaii market.

    You mentioned Sweep. Did you flip the whole mortgage into a HELOC, or you have a HELOC on the side? If you flipped the whole thing, then your cash flow should be pretty good for now.

    Seeing that you're purchasing two properties on the mainland now, I'm assuming you don't need the equity from your condo here to finance deals in other states?  That's perfect.  I'd recommend keeping at least one asset here in Hawaii (maybe not your current property).

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  • Jim BlackburnBusiness Member
    Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 321 posts · 121 votes
    9y
    Hi Sean Sakaida It sounds like you might need a property cash flow loan that does not require tax returns, pay stubs, or W-2s… Instead, this kind of alone with on the look of the cash flow on the property… typically we will qualify based on 90% of the appraisal rent schedules… Ask anything. Jim
    954-993-1625
    Stairway Mortgage, a Division of NEXA Mortgage LLC597 Reviews
    WebsiteView Page
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