Quote from @David M.:
Quote from @Account Closed:
Arn,
Thanks for the response. To answer some questions..
It is a SFR in Park City, UT. My basis is around 12k "I used a VA loan". Value is around 1.5, the loan balance is 409k, my interest rate is 3%, and the purchase price was 525k in 2013.
I agree about the idle capital. The property has obviously exploded in value. The market will continue to gain value but there is a sealing " to a degree" on the rent. I just don't know if I should continue to ride the equity train or find a higher cash-flow property. Wether it be a few rentals paid outright, or a fourplex or something.
@Account Closed
So, what are your goals?
Its easy to use metrics/statistics to say "anything..."
Looks like you have ~1mil in equity that sounds like you say not doing anything for you... Its really just untapped appreciation. Your $12k "got you" $1mil !!! Holy. break out the crystal ball --- do you keep riding the appreciation? do you think the appreciation is done and "cash-in" and get more properties?
What if you just keep patient? Use the power of leverage to pay off the loan? If it doesn't appreciate you will have $1.5mil free and clear, and then look at your cash flow. What is that, 20 years (didn't pull out a table) and you'll have some cash flow to live off assumed closer to retirement. Or, take the $1.5mil and invest / live off it. by then it might be $3mil....
So, it goes back to your goal/strategy. No... saying that you just want checks in the mail or be rich isn't an answer. Is $1.5mil enough for you? Is $1mil enough for you? could you retire now? What about retire "later?" If one property won't get you enough, then you should probable scale and leverage some more to meet your goal.
In my opinion, the "good" investors / wealthy persons are not "one trick" wonders. They invest where the opportunities are and invest in a manner that meets their goals (for themselves and for their whole family). This includes different types of real estate investments and non-real estate investments. A rental isn't the end all.
Hope that helps. Good luck.
Hey David,
The matter of appreciation is tough. Logically, one would assume there is some cap to a degree. It is a SFR, 2400 sq/ft in a neighborhood. In terms of cash flow being enough is tough to say. Even if I paid off the loan, I would net 4k/mo. But... having 1.5m producing 4k is tough to swallow. My plan was originally to eventually pay it off and it would be a nice income check during retirement "I'm only 38" so I have a few years to go. Anyway, because I have so much equity in the property, I feel like doing a 1031 into a fourplex, or multiple for that matter might be a better long-term option. Obviously the market matters. I am strongly considering Boise, as I have family there and the town has exploded. In my mind, it's a matter of more units equals more profit. Obviously, there is way more that goes into it than that, but good properties, in good markets, can make good money.
I have also been involved in three syndicated apartment deals in TX. CoC is relatively low, they are value add deals so the refi/sale is most of the profit point. I say this because it seems like I have done better with a couple of SFR than apartment deals. Buying more expensive than the first-time investor, but less expensive than the multi-million dollar deals seems like a nice area of the market.
In all honesty, I feel a bit of imposter syndrome, I am making progress, but I think I could be making a lot more if I knew what I was doing.
