All Forum Posts by: Cody Thayer

Absolutely sell and sell now.  Next year (she says as she pulls out her crystal ball), we'll have a correction in the market of around 20% from today's values and you'll have an underperforming building that's worth 146K instead of 170K.  If you owe 120K and pay a Realtor 6%, you'll barely break even.  Unfortunately, you bought at just about the height of the market.

@Cody Thayer Investors are always buying/selling/wholesaling property. Investors are always reviewing there numbers. You said the property cash-flows $800. We assume that's after all the expenses because if not you better check the numbers. ROE probably fell off cliff but who cares? Nashville is a great market I'd hold onto everything you own. 

Hello Cody, you are asking yourself excellent questions! First, it sounds like you are in a great situation so congrats on getting yourself to this point. Next if I were you I would take inventory of your return on equity and the amount of time you have and are willing to invest. Your return on equity in this deal is 800*12/200,000 which is 4.8%. This is pretty low, and since you sound like a knowledgeable investor I am certain that you could get a better return on this money elsewhere. 

Now that you know it is better to tap into that equity the question is how should you use it. If you have the time to manage your current rehab and purchase and manage another property then you should definitely do that as it will probably give you the highest returns. If you think that would be too much to manage you could consider investing in a syndication or partnering with another investor where you are the cash partner and they are the sweat partner. I actually know a syndicator who is doing a capital raise who is based out of Nashville, if you are interested let me know and I can connect you. I am also looking for cash partners on deals and would be down to talk but I am not here to pitch that, I just want to help you get the best returns on your money!

My last comment would be that it sounds like you have some concerns about the market volatility. It is good to be conscious of the market and if I were you I would make sure that you have healthy cash reserves to cover all of the RE projects you have going on before you go invest in another property. If you do this then you will be protected regardless of what the market does. Feel free to reach out if you have any more questions and I will do my best to help!

One concept I learned a few years ago really blew my mind and instantly converted me into a buy & hold investor. It was the ROI on home appreciation.

If you own a $350,000 rental property and it appreciates a boring 3% per year, that's $10,5000/yr in appreciation.  That's almost $1,000 per month!

Holding on to property, even without big cashflow, is always a win.  I would recommend to always be buying as long as you have at least $10,000 in reserves for each property you own.

Good luck!

It would be the best financial decision to purchase another property instead of renovating first. Don't string yourself out too thin, however, if you have proper reserves it will be far more beneficial than renovating your Live-In property. Now if the 1958 home is in dire need of updates, go ahead, but it sounds like you can live with the outdated house and put that money to work in a different property. 

With this being said, there are a lot of bad deals out there right now, so double check pro-formas, do proper due diligence, and the next investment will be a cake walk. Good luck!

Hey @Cody Thayer - I don't think you messed up at all. You earned a solid amount of cashflow for the years it was rented well, and made a big dent to the amount of equity you were able to gain from this. This is a win, and just like anything else in life random things happen and you have to deal with them. 

I'm a bit concerned about the unit not being able to rent for the  same amount as before, did something happen in the market to cause this? One thing to also consider is that you're not necessarily eating $300/month in cashflow. The tenant is still paying for a big chunk of your mortgage, while building equity in the home, and the property appreciating - there's more than one way to look at the scenario. 

In terms of selling and getting into another 30-year... what's the gameplan here? Why not just refinance into a 30yr on the same property - unless you absolutely hate it and want to get something bigger. 

My $0.02 there's more than one way to peel this onion, don't narrow yourself into just an option of selling and buying another house that you'll be in the same position with (numbers wise) in a short while. 

Hello Cody! FIrst, I am sorry that your loan officer gave you this bad advice! You should definitely sell this property and 1031 into a better asset. It is not worth it to be losing money every month and just hoping that it will get better when you could park that money in a different city where you will experience better cash flow and likely better appreciation and rent growth. I would also stick to the 30 year mortgage. For your next investment it would probably be better to speak with a property manager in the area or to have a partner who knows the market well and should be able to give you accurate rent estimates.