All Forum Posts by: Alex Guerrero

That being said, I would think your best plan of action would be to sell the house. Then funnel that money and savings into several short term rentals (larger cash flow). From there you can work into more short term rentals and/or long term rentals. I don’t see why you couldn’t pick up at least two good properties to use as short term rentals now with your savings and equity in that home. You’re going to want to focus heavily on cash flow. You may not find that where you live or move too, but don’t be afraid of investing in other areas. Just be solid in your research and due diligence and you’ll do well! 

Your goals need to be something you decide. Do you like your job? Are you making enough money to live how you want to? Do you have kids that you want to provide a better life for? These are all questions that are different for different people. If you don’t like your job, maybe your goal would be to build enough cashflow to quit the job with. Maybe you like your job and just want to be able to take more vacation time or more time with your family. I’d recommend reading as much as you can about different investing strategies and picking one that suits you, but you have to stick with it. Then set goals (ex: 10 units in the next year so I can quit my w2 job). Work backwards from there. Listen to Biggerpockets podcasts if you aren’t already. Just start soaking up information and do a little digging within yourself to see what you want out of life. A lot of these questions can only be answered by you! While it’s a lot of hard work, it’s worth it. 

Hi Alex, I love the San Antonio area and have a few rentals there.  One rental that I bought 2 years ago was not cash flowing at the time, but since then I have refinanced it and now it cash flows and has appreciated quite a bit.  It seems that the market is still going up.  I would say if you are able to tolerate a small negative cash flow, then keep the property. If the cash flow is only a little negative, consider that you are paying down the principal on your mortgage as well and that gets you to a break even point. You will not get as much profit as you think after closing costs if you sell.  Another suggestion, market for tenants or a friend/family member to move in and if it doesn't work out in a certain amount of time, go ahead and sell it. But ultimately I agree with others like Ben, it depends on what you want for your future and if you need the cash or don't want to manage the property, then selling is right for you.

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Quote from @Account Closed:

Quote from @Alex Guerrero:

Im 24 and looking to change my future. Im going to be moving but i cant figure out if i should sell my home (which is my first home) or rent it out. After i lose my homestead to rent it out the morgage will be about 1815.44 a month including taxes/escrow, intrest, payment.

I purchased this home at 198,500.00 it is now valued at 232,000 minimum and i owe 186,668.73 remaining on the home.

In short is it best to sell this 2 year old home thats in a developing neighborhood or should I create my first rental with this home?

 Alex, first welcome and good on you for looking to build financial freedom! 

The answer to your question really depends on several factors. First, what are the rents in the area? Will this rent be enough to cover mortgage, taxes, insurance, capital expenditures, vacancy, saving, and management(if you don’t plan on self managing)? Second, how will this affect your ability to purchase another home? Will your debt to income be too high to purchase? If so, maybe look into buying a small multi family and house hacking (renting out the other units while living in one). 

Hope this helps! 

 replied to you above^ sorry learning to navigate this site.

Hmmm. With negative cashflow, I wouldn’t bank on appreciation. Given that you’ve lived in the home for two years, you should be able to avoid capital gains taxes (check with a tax accountant). I’m thinking your best bet might be to capitalize on your gains and buy in an area with a better price to rent ratio. If you need to look outside of where you live, do so. Check out the book Long Distance Real Estate Investing by @David Greene . He gives a great run down of what to look for and how to manage when you’re not investing in your own backyard. 

Though there are factors at play here. What is the current interest rate on your loan? Can you get an interest rate that is comparable (interest rates are rising)? Additionally, the interest rates for an investment tend to be higher.

Even more factors at play! Do you want long term rentals or short term rentals? @Avery Carl has a book Short Term Rental Long Term Wealth. She goes over the different loans you can get as well for short term rentals. I believe you can get a loan for a vacation home with 10% down. You could possibly use the equity from selling this house and buy two or more in different vacation markets. Managing will be different, and it can be more of a hands on investment. 

It can depend entirely on what your goals are and how you want to invest. 

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Hey @Alex Guerrero, I am 24 as well!  I think this depends a lot about what your goals are for the future.  For me, I am always looking to build passive income, and that means that I would keep this house as a rental.  But it would depend on how much you can get in rents for the home.  If you do sell, what would you do with the money?  Buy another house?   I think renting it out as your first investment would help you to gain a lot of experience in how to manage and run a rental, and help you to get a feel for what is needed to buy more properties.  And maybe you even rent it out for a year and then sell it, but whatever you do, you have some good options.

 My mortgage has gone up about $200 from last year, a realtor in my area had let me know that that could be expected again this year because my neighborhood is a new and developing neighborhood that the city is still trying to gauge the value of it. Right now I have a close family member looking to rent it out for 1800, that would put me at -$15 now this could be worth it if the house gains value again next year then I could make over an extra 15,000 to sell then potentially, right?

Why is your mortgage going up, due to property taxes?

I never rent a property that doesn’t generate at least $300 per month in profit and it’s important to separate family from business 

You need to figure out what the market rate for rentals are, not what a buddy or family member is willing to pay

Agree with previous post, ultimately it depends on what you want to do or learn - both selling and renting can be good options depending on end game

It should come down to the numbers, also taking into consideration closing costs/fees when selling. 

Have you done research into your local market to identify what market rents are? There are a ton of great tools here on BP to help you analyze your deal. 

Is the year over year increase from property taxes? 

Hey @Alex Guerrero, I am 24 as well!  I think this depends a lot about what your goals are for the future.  For me, I am always looking to build passive income, and that means that I would keep this house as a rental.  But it would depend on how much you can get in rents for the home.  If you do sell, what would you do with the money?  Buy another house?   I think renting it out as your first investment would help you to gain a lot of experience in how to manage and run a rental, and help you to get a feel for what is needed to buy more properties.  And maybe you even rent it out for a year and then sell it, but whatever you do, you have some good options.

Quote from @Alex Guerrero:

Im 24 and looking to change my future. Im going to be moving but i cant figure out if i should sell my home (which is my first home) or rent it out. After i lose my homestead to rent it out the morgage will be about 1815.44 a month including taxes/escrow, intrest, payment.

I purchased this home at 198,500.00 it is now valued at 232,000 minimum and i owe 186,668.73 remaining on the home.

In short is it best to sell this 2 year old home thats in a developing neighborhood or should I create my first rental with this home?

 Alex, first welcome and good on you for looking to build financial freedom! 

The answer to your question really depends on several factors. First, what are the rents in the area? Will this rent be enough to cover mortgage, taxes, insurance, capital expenditures, vacancy, saving, and management(if you don’t plan on self managing)? Second, how will this affect your ability to purchase another home? Will your debt to income be too high to purchase? If so, maybe look into buying a small multi family and house hacking (renting out the other units while living in one). 

Hope this helps!