Selling our Primary Home to free up more cash

[Kathy Henley]

It sounds nutty. We've loved our walkable California Bay Area home, giving us healthy appreciation over the long run. We going to sell it and get an apartment! Our HELOC, borrowing from the equity of our primary home, has gone far to seed our 6, multi-family properties. We started real estate investing 3 years ago and have 21 cash flowing units. Each one is like a little investment. But we want more.

The banks have gotten fussier about reserves. Each loan has been a little harder to prove that we have the funds to cover unexpected outlays, and we have 6 loans. Since we buy underperforming properties, it does take a bit of cash to add value and bring up the rents. The 5th property was half price! It was also half empty of tenants. In a year, it will be cookin’ nicely, but explaining this on a loan application does not impress.

I am nearly old and in a hurry. Today I toured a 650 square foot apartment in Berkeley, a 148 unit building. It looked terrific. It has a washer dryer in the unit, located close to BART, and about the same price as our current housing expense. The gain is access to a bucket of money. We are down-sizing and keeping our office jobs for a few more months. All these little steps are getting us closer to living independently, by our passive income.

We have seen home values rise and fall. Since we bought in 1995 and never refinanced the loan, the banker said that we had a solid base for turning our equity into little St. Louis properties. She didn't say quite like that, but she helped us set up our plan. Since we are close to our goal, and leaving the state is part of the plan, why not sell our SFH while sale prices are crazy high? We can rent. The kids live on their own. If we waited and the market goes flat, it might take a few years to get back to today's high. Loan applications will look rosier. We will be ready for the next deal.

[Brendon Grover]

My family and I are also selling our primary residence this summer.  Freeing up cash and losing the liability of expenses associated with owning a home will get us debt free rather quickly to restart our lives with financial intelligence. We plan on purchasing a small multi and living there for free essentially while i start building my portfolio. Once when people realize to start buying assets instead of liabilities and know the difference with they begin to see financial freedom. Good luck to you and yours.