The First Investment

The first investment: a Buy and Hold

Like many real estate investors, we started by taking our renting our primary residence when we moved. The how’s are all answered in here.

Front end analysis:

We rented the home to the same tenants for 2.5 years. When the lease was up, they were moving and we were looking to sell.

Why sell? Well, it depends! (Favorite engineering answer)

• If your goal is long term wealth, this would have been an ideal property to hold onto for 30+ years. It pays for itself, is appreciating rapidly, rents are rising and it’s a fairly new home (low maintenance).

• However, our goal is currently cashflow. So using the formula below you can figure out the Return on Equity (ROE) and if the equity is better spent elsewhere.

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**(A second idea here would have been to refinance) however the long distance management, and 0% VA loan we started with, and relatively low cashflow made selling a more attractive option.   

So we sold! One thing to remember, if you lived in the property 2 of the last 7 years, you will be exempt from capital gains taxes. Back-end analysis:

Happy analyzing!