All Forum Posts by: Duke Butterfield

Josh - thank you! I missed your response before I sent my follow up to the last user. But yes you've given me much of the insight on the sell vs rent numbers I  interested in. And you clearly have some relavent market knowledge. Much appreciated!

Do you have any additional insight on continued self manage from OOS vs PM? How have you made that decision for your prior primary residence to rental properties?

Thanks Jeffrey!

Bill, thanks - 

Moved to CA. Moving to CO this year. Taxable income will jump in 2026 and again in 2027 substantially.

I don't follow the 50-100k mistake logic entirely (not to say it isn't the case). The property appreciation from 2021-present has been substantial. The net gain even after tax will still be high (+ the passive rental income). Was the 'average' alternative investment in 2021 with 200k unoquivocally better than holding the asset (and by 50-100k)? 

All that said, it's water under the bridge. What's the move now? 1. Consult a tax advisor / CPA (have never worked with one before so all that shade goes on me!) to determine true current equity if we sold today or when we move to CO. Isn't capital gains tax rate lower than income tax rate for comparing basic CD income vs continued property (hypothetical appreciation? What am I missing here?

What about on the rental side? What is the upside of retaining this type of asset long term in isolation (likely won't be building a portfolio or 1031-ing anytime soon, but maybe in a decade)? I'm the meantime, is there someone we can consult to understand these numbers and near term ROI to compare to what the tax person comes up with?

Your question on the loan - do you mean total mortgage (interest and principal) or just principal when you say 'paying off'? Total is ~$1,720/m nearing yr 7 of 30, so principal payments only in the $500/m range right now.

Thanks again! Loving this community already.

My wife and I purchased a home in Scottsdale, AZ in 2018 - $325k loan, 4.875 rate. We moved out of state in 2021 and have been renting ever since (long term, current tenant 3yrs @ $2,850). We had maybe $200k in equity when we moved, but home values were still skyrocketing and didn't seem like it was a peak yet. So we decided to rent it because we didn't need capital in new location and we could immediately see positive cash flow. There was also a chance we moved back. 

We now face a cross-roads of sorts. We are very much in the Growth phase of our financial journey but also have other irons in the fire. We value the passive income of renting, but is the opportunity cost vs other passive assets too high? Is holding a rental asset like this long term a smart financial decision? Hold a couple more years? Hold forever? What factors should we be weighing? Will the Scottsdale SFH market continue to stagnate or boom again (or dip further)? Can we transition to truly passive (use a PM) and still have this be financiallu beneficial or are we likely going to see better ROI if we sell and invest in something truly passive like financial assets?

More details and thoughts:

Sell option - We no longer have any intention to move back. Home value has appreciated substantially: peaked (~$720k in 2022), slumped, and now stagnating or growing slowly (~$680k). I did not know about the 2 of 5 years rule for capital gains and that ship has unfortunately sailed. We still don't need the capital, but may for primary home down payment in in the future (after the next relocation!).

Continue Renting options (self-manage or PM) - Our initial experience has been smooth, but of course not perfect. We are starting to get a clearer picture of the benefits and burdens of having an investment property, but we are still very new to this. So far, we have averaged roughly $800/month cash flow after all self-manage costs. Current tenants are amazing. We have a bit of a word-of-mouth network of tenants (residency/fellowship physician community), which is how we got the first two. We might have another reliable tenant already lined up. On whether to hire a PM - we are starting to get nervous managing OOS as we look beyond our current tenants - it can't always be this smooth. I am also not sure my self-management is efficient -  could a PM do better for me? Reading here about the variance in PM quality, finding a good one seems like it is perhaps the most important factor in the PM decision. That seems difficult/risky.

Other options? - E.g. "like-kind" nearby / in-state seems to come up a lot in these forums. Unfortunately, don't think this would be feasible in our current area (prices WAY higher, as are rates these days).

Lastly, you may run our numbers and say we should never have rented in the first place, but we did. You may say we should have sold before 3 years to avoid capital gains, but we did not. What else are we overlooking? How should we be thinking about this now?

Thank you!