New guy from Los Angeles, relocating back home to NJ... do I sell or rent my property in LA?

Question

Hello BP...

I have listened to the podcasts, but just never signed up. Long time listener, first time "poster"? Anyway, if I would be relocating back to NJ and I am debating on whether I should sell my property in LA. I would stand to make about 35% on it, which (to me) is a homerun for a Los Angeles property on the Westside. I could certainly use the equity and purchase more properties, or I could hold on to this one as properties have appreciated through the roof. Also, this was the first property I purchased, so I used my first time home buyer "blessing from above" with this property and have a 5/1 ARM. I don't even think they do those anymore. I would lose about 100-200 each month, however, the "proposed" resale value would certainly be higher than 2,400 next year. I know I can not predict the future, nor would I expect anyone else to... just asking what they would do in this situation.

Also, I am looking for some sort of mentor-ship in the Los Angeles - metro or New York - metro areas. I would love to expand my RE portfolio. I do have a full time job in the tech field, but I have had my RE license since 2004 and it has always been my passion.

Would love any and all feed back!

Regards,

Jon

Jon Huber · Answer

Mehran K.  Thank you. I'm researching areas of positive cash flow now. Completely agree. I'll check out that podcast!

Mehran K. · Answer

Welcome to BiggerPockets @Jon Huber! Thanks for the introduction.

Regarding your internal debate, I personally live here in LA and own properties out of state. If I was in your shoes, I'd sell the home and invest in a market that produces cash flow.  I'm a cash flow investor and choose not to speculate on rising home prices. You never know, L.A. could tank next year!

Brandon Turner · Answer

Hey @Jon Huber thanks for jumping in and introducing yourself! If you haven't yet- be sure to setup some "Keyword Alerts" to get into conversation in your target area.

Seeya around!

Dave Visaya · Answer

Hey @Jon Huber Thanks for introducing yourself and it is great to have you. Definitely check the podcast to learn more about REI.

If you like, you can check this quick guide to learn how to use BiggerPockets to grow your business: http://www.biggerpockets.com/biz

See you around!

Elizabeth Colegrove · Answer

@Jon Huber

Everyone has their own goals. We own 3 houses out of state and 2 close by. We are active duty military so we move a lot. We are thinking about buying a house in sausiliteo, san fran sooner than later as a place holder for when we retire. Have you thought about offering your house as a fully furnished monthly rental or other option? Are you planning on coming back to LA at any point. We have done very well with out of state rentals. We self manage which has allowed us more control and saved the rental fees.

If you have owned the house less than 2 years talk to a CPA. We were told that we could sell less than 2 year if it was out of our control. In our case we were discussing it do to a military move so I don't know about your situation. At that point we could take the percent that we were there times the exception and that was the amount that was capital gains free. If you are going to sell. I recommend talking to a CPA about your specific situation.

Jon Huber · Answer

@Bill Jacobsen  thanks for the feedback.  It's looking like I'm leaning that way

Bill Jacobsen · Answer

Given the price of your house I am surprised that your negative  cash flow isn't more than it is.  If you end up moving I would consider selling when your two years are up.  After selling you should have $100,000 to $150,000 in cash.  That equity put in several houses in NJ should create a greater income than now.  Plus, the properties will be near you.

Good Luck.

Bill

Jon Huber · Answer

I own my propery in LA (Mar Vista), and it's not in the $2m... But it was purchase for 450k and is valued over 600k (as per my neighbors comps selling this month). I haven't hit two two year mark on my property yet. So selling now, I would have to pay the capital gains. I am thinking to move to NJ (where I purchased an investment SFH this year)  at the end of 2015. I would not be moving into that home. I am a licensed realtor in NJ where I actively sold from 2004-2007. When the bubble burst, I didn't have the clientele at 26 years old to weather the storm, so I fell back onto my degree. It's done me well so far. So my passion for RE is owning and the thrill of the chase in finding diamonds in the rough.

@Brett Synicky undefined and @Bill Jacobsen   Let me know if you have any other questions. Thank you both for the feedback

Brett Synicky · Answer

@Jon Huber welcome to BP sir! Based on what you've said I say sell but price it right so it sells quickly.

Have you ever been a landlord?  Have you ever been a landlord from across the country?  Does your $100-$200 negative factor in around 10% for property management, repairs, vacancy factor? As an agent you know that California real estate is slowing down. Unless your house is above the $2 million range. Your specific market may be different I'm not sure. If you follow Robert Kiyosaki then you know that an asset is something that puts money into your pocket each month and a liability is something that takes money out. By his definition a monthly negative is a liability. Something to consider. Betting on appreciation is dangerous. Even in the golden state.

How much time is left on the 5 year arm?  Get out of that arm either way by refinancing or selling.  My opinion is sell and buy a modest home for cash in nj or put a ton of money down and get a 15 year mortgage.

I'm not attorney or a CPA this is just what I would do in your shoes.

Good luck sir!

Bill Jacobsen · Answer

Sorry, but there isn't enough information for me to give an opinion.

I am a landlord in a number of states including my home town.  I wish they were all in my home town.

I think you were asking, what would you do if I have to move to NJ.

I wasn't sure if you owned investment properties in either state.  If you own others in LA why not ask about them.

Are you making money  as an agent and do you have your license in LA?

If you have a passion for real estate, is it selling RE or owning RE.

You are still making an OK return on the house but the return goes down as your equity goes up.

Good Luck.

Bill

New guy from Los Angeles, relocating back home to NJ... do I sell or rent my property in LA?

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