All Forum Posts by: Dan Nutter

There's definitely a correlation between the two, but it's not a direct correlation. Rent increases tend to lag a couple of years behind the home value increases, from everything I've seen.

And yes, in our current housing market it seems as though positive cash flow is not as easy to find as it was a few years back. In the geographic location I invest, I'm happy to be cash flow neutral for a year or two before rents catch up. I'm also hedging my bets on future appreciation, which I'll admit isn't necessarily the best way to invest (it's more like an educated gamble).

With the rent increase, personally I wouldn't sweat also increasing the deposit (at least not for the next year, or whatever duration the new lease will be).You're not risking much by keeping the deposit amount as-is.

Regarding how to show it in the new lease, it's not a huge deal. You will want to state  in the lease there's a security deposit of $2,850, but it would be abnormal to state "the $2,850 security deposit from tenant's previous lease will rollover to this lease, and no additional deposit will be collected during the duration of the lease."

What I would do is write the tenant an email informing her that the security deposit she initially paid will continue to rollover into her new lease, and now you've got a paper trail of your intent. I've been managing my properties for a decade, and I've never even considered this :P 

I'd say do the cash out refi. 1) Interest rates will be going up, and most of us have forgotten have ridiculously low a 3.5% mortgage is. 2) You nearly triple your cash on hand for doing "other things." 3) You know you want to jump into the game, and having cash "sitting" may push you into into action. 4) Hell, worst case you open a BlockFi crypto account and earn 8.5% interest on that $90k :D 

@Annamalai Karthik As others have mentioned, you're going to be hard-pressed to find cashflow positive properties in the areas you listed (unless you're putting 30+% down). Rents haven't quite caught up to the high gains in home prices.

If you can buy now and deal with some neutral (likely negative) cashflow for a year or two, I think it's a great region to be looking at.

@Kelly McKay I think pulling out the cash for another investment is the best route to go. I'm currently in the process of doing a cashout refi on both my primary ($550k @ 2.99%, cashing out about $330k) and an investment property ($900k at 3.45%, cashing out about $560k). Your rates look to be in line with what I've been seeing, and I wouldn't be too concerned with going from a 2.75% to 2.99% rate because that $100k will do a heck of a lot more for you being actively invested.

I'm just hoping I can figure out what to do with my cash so it's not sitting aimlessly for too long...

Hi Avid, though I'm not an expert in rental prices, I do own a few properties throughout San Diego County (Encinitas to City Heights). I think it would be hard to hit that $4,300 mark right away, but give it a couple of years and I'm sure we'll be there. Though nobody can predict where the San Diego market is headed, it's extremely likely both home values and rents will continue their upward trajectory for the foreseeable future.