All Forum Posts by: Clayton Pearce

@Alyssa Dyer The properties I'm looking at are $150-200k, 2-3 bedroom, in the Kansas City south suburbs. So 5% down being $7.5 to $10k. On my first purchase I was able to get $4k in lender credit/seller concessions, so I was able to pay about $5k out of pocket for down payment and closing costs combined. A 5% down payment will take most of my current cash reserves... so I'll need to get creative on the financing. I'm in the middle of reading The book on Rental Property Investing and hoping to use some of the creative ideas in it.

Wow, thank you for all of the input, this has already been very helpful! This was my first post on the platform and I wasn't sure how much response I'd get. I'll try to address a lot of the questions above and provide a little more background on the property. I got in the property at $150k, had $5k in closing costs and down payment, put $8k into improvements, and based on comps believe I could get $175k-180k. It is currently renting for $1200/Mo with $1150/Mo in expenses. So my current ROI is about 4.6%, which could be bumped up to around 13% if I refinance, leave the equity in the home, and peel off PMI.

@Dave Foster I was planning on doing a 1031 but I do need to familiarize myself with these more, I'm not sure of all of the specifics and regulations. Any articles/podcasts suggestions on this that you would recommend?

@Alyssa Dyer I am in SFH currently, I got it as an FHA with 3.5% down. From what I've heard, I can't refinance (or get a heloc) because my equity is still around 20% and a lender would require that 20% equity in the home at a minimum when refinancing. And yes my plan is to house hack and maybe get another FHA.

@Tyler Jahanke Thanks for the advice, I'll hone in on my analysis a little more. My current property is basically breaking even with cash flow (Thanks to PMI...). There really is very few properties for sale in my area in my price range, so a sell would be speculative that more will come soon. Which to your point, if there is nothing out there right now to buy, then why sell.

Jonathan,

Thanks for the input. I understand at knee jerk reaction it may seem this strategy is counter intuitive but there are several case studies of people executing this strategy with good results. After all, if my goal is to get more rentals, and selling this one allows me to get two I'm moving in the right direction. I also can't refinance because the equity is still under 25%

My main concern/question is if I'm over estimating the hot/cold cycle of the market or making a bad assumption that the market will cool off in the coming months.

Thanks,

Clay

About two years ago I decided I wanted to start investing in Real Estate with the hopes of acquiring several rental properties. I bought a house, lived in it for two years, moved out and started renting it. As you know, starting out in real estate my biggest barrier to acquiring more properties is capital. With the market being still being hot, even with the COVID situation, I am considering selling this house to pull out the $20k in equity I have added in order to have enough capital to purchase more properties down the road.

I am basically wondering if it is worth trying to take advantage of selling while the market is hot, and assuming the market will be more buyer friendly in the coming months with the impact of COVID taking a further toll. Even though selling a rental property seems to go against my long term goal of aquiring more rental properties. Any advise is appreciated as I am new to this and just getting started!

Thanks