Portfolio of 4 Properties - Netting Apx $2000 / Mth - What Next?

[Sunshine Bizz]

All - Here are my basics and thank you very much for taking the time to respond:

- Property 1 - Leveraged, P&I payment of $1400, rents for $1850 (Paid $250k, going for $280k) ... For kids college

- Property 2 - Leveraged, P&I payment of $1380, rents for $1850 (Paid $240k, going for $270k) ... For kids college

- Property 3 - Paid cash, rents for $950 (Paid $50k, rehab of $20k, going for about $65k) ... Cash flow purpose

- Property 4 - Paid cash, rents for $1025 (Paid $75, rehab of $6k, going for $100k) ... Cash flow purpose

- Property 5 - Home, HELOC approved for $120k ... not used for anything yet.

Note: Husband / Wife basics: Both work, our income is about $200+k per year

**** Request, ask, question, guidance needed. What would you do with HELOC from primary residence and what can be done with Property 4? I know it "all depends" but what strategies would you use knowing my situation to grow this portfolio to 7 properties netting me about $3500 per month? ****

Thank you for your time. 

Regards, 

Mike Rehman

[Dave Foster]

@Sunshine Bizz  Just call @Jaysen Medhurst Debbie Downer :) . He makes a couple of very good points for you to examine to get at the true cost of ownership and operating those rentals.  My two cents is a only slightly different.

On props 1 and 2  you really don't have any gain now other than depreciation recapture.  By the time you get those sales to a net price you're not going to make much.  Especially since you live in a tax free state.  I'd be real tempted to just hang on if they're easily rented, don't have a lot of deferred cap ex, and let the the tenants pay down the mortgage as your kids grow to college age.  Yeah they're not the best numbers but by the time you consider costs of financing etc You're not going to come out of those with much cash to put into something else.  So if they don't hurt you just hang on.  

3 and 4 are different stories.  If you're actually netting 950 on a 65K investment that aint bad - again as long as the numbers are true, they're easily rentable and no hidden cap ex.  That could be a 15% roi you've got there.  That aint shabby.

4 - almost same thing just not quite as sweet.  

Yes, either one of these or both could sell and buy you a much larger property that might give you some good cash flow.  And the 1031 would let you get there with no tax hit.   

But was it me I'd call the bank and get rid of that heloc yesterday.  You've got plenty of traction to separate your investing from your homestead.  Using your homestead for investment is inviting trouble.  In Florida especially your homestead cannot be touched for anything but a foreclosure.  Keep it in cash.

But then go back to property 3 and 4.  do refinances there to pull out cash to go play with.

I know the banks make helocs attractive.  But there's a reason for that.  If it all goes south they can attach a heloc quicker than you can say Dodd Frank. And since it acts as revolving credit it can be reset, or reneged at any time.  and the late fees and penalties - higher than a Colorado politician!