I woke up with $1.1 million equity and have NO idea what to do.

[Dennis Nikolaev]

Thank you for opening my post.

I was haphazardly dumping cash in San Diego rental properties since 2006.
I don't call it investing, because I had no idea what I was doing. Fortunately, I got in on the upswing of 2012 -2018 appreciation wave and now I have 6 units with $1.1 Mill in equity (1 being paid off and enough cash to pay off 1 more)

Here are a few directions I have in mind.

1. HELOC the paid-off unit for 300k and buy for cash another one on the outskirts of San Diego.

2. HELOC the paid-off unit for 300k and get several turn-key properties in Mid-West (Illinois possibly).

3. Focus on paying off untis with the smallest balance. HELOC them all and wait for the next swing in prices on the west coast.

Please, share your advice; what would you do with 1.1 mill equity NOW.

Dennis 

[Jay Hinrichs]

Originally posted by @William Thorn:

@Dan H.

I completely agree with the fact that San Diego is good for appreciation but having 3-4plexes that are based on comps, I will not get the benefit of appreciation if I don’t sell high.  I don’t want to assume it will continue to climb significantly in value, I want to take advantage of my equity and move it to cash flowing properties at this point in the cycle.  If we have a pullback I will but again in San Diego.

Couple nuggets for those on the west coast looking to cash in equity and chase cash flow..  keep in mind you have this money because of appreciation not cash flow .. when you go OOS in many areas and chase cash flow your chance at any significant move up in value has just gone away.. and if you need to exit or want to exit your going to probably receive back less than you paid so that will erode into whatever cash flow you garnered.. by and large  we see it all the time I am buying for cash flow and I don't care if the properties never appreciate.

So if you are still going to do this U can protect yourself.. if you buy MF that are solid B's go no lower.. and if your going to go into a gaggle of SFRs just figure out the median price of a given MSA I will pick on INdy since I know it.. its about 134k if you buy at that price point give or take a few bucks either way.. you can have a chance at some move up in value it wont be much but it could say be worth 150 to 160 in 5 to 7 years and with sales cost you would at least break even.. Also YOur Risk factor goes down a ton.

Keep in mind HIGH yield cash flow on paper in the mid west or "cash flow markets" will come with greater risk of non pay and beat up units. Also once U buy them the ONLY exit is to another investor and the locals wont pay what you will pay..