All Forum Posts by: Dustin R. Smith

Not sure what to do with this one...sacramento based for some reference.

Bought a flip cash ($85k purchase plus $30k rehab) and didn't think the are was to bad also I wasn't concerned because I had a tenant in hand at $1200 a month plus they pay all the fees, again to be clear ALL the fees, HOA, prop tax, utilities, maintenance.

Rental income per year would be $14,400

We put it on the market to sell at $175k and all the feed back was great property but the HOA is terrible and doesn't maintain the outside well. Lower the price, lower the price again and now I have an offer in hand at $140k. After fees I get $132k. 10% return, over 7 months of hold plus $1200 months of rental income that I don't really account for but it's in the back of my mind.

Selling the property gets me out of a long term headache...WHICH AS OF NOW HAS NOT BEEN A HEADACHE SINCE THE RENT CHECK IS COMING IN. and selling gets my cash back.

I’m not happy with only a 10% return but I am

Also considering that if I just keep it as a rental I make $14k a year. If the market drops by 20% or 50% I’m still getting my rent and the loss of value is only on paper.

With all that said it's not in a great area and I'm not hearing great feedback on the HOA.

So should I sell and chalk it up to a 10% gain...but hey at least it’s not a loser. Or should I just consider the longer term play and keep

It as a not so ideal property that makes money.

@David Acosta...I understand it has to do with a determination in November that the region was a flood risk. Sorry I should have included that in the OP

I have not ran into this before...advice wanted. I flipped a condo, which I have done many of times successfully. This one was different in that it is in a bit rougher part of town, but units sell. My agent told me there was a change in the HOA that limited loan types and therefore it has to be a cash buyer or at least non Fannie/Freddy/VA. I own it outright. Have it rented with a 2 year lease at a high price. All is good. But I would like to sell it to move on. Even if I drop the price I will make plenty of return so that could be done. Has anyone been in this situation? What did you do? Does seller financing make sense? Thoughts?

@Jonathan Dempsey I do this with my tesla. It works well, not amazing but yes most months it pays the car payment. I don’t need the money but I do not drive my tesla that often so its nIce to Offset The Payment

@Aaron Klatt I have experience in this area, specifically condos. I look at the HOA as a big brother who generally want to improve the condo complex and are thankful to see someone improving the units. My last deal closed Sept. 2017. $83.5k. Rehabbed it for $20k. Decided I may keep it so i rented for 5 months, then sold it for $165k. Doing another now should be the same results. Buying for $85k. Rehab should be $25k and then sell for $175k. Do you have any specific questions?

Ryan...no I am not losing sleep not in the slightest way. I should have chosen my words better when I said crash. I agree with a plateau especially in Folsom. But selling and capturing the high value and thus equity would pay a unit off. Maybe this is easier asked this way...should I pay of a mortgage on a rental unit or not. The reason I did not phrase my initial question this way is because I wanted to specifically get input knowing I am selling a unit that has profit rather than using money from say my savings or 9-5 job.

Thank you for the responses. Follow up...I am not sure someone had anything to say about selling to pay off another property. We would still be in the rental markets as I have others but I can have access to more cash by selling 1 unit and then can redeploy the cash when needed by taking it out of the unit that is owned free and clear.

My wife and I own 4 properties, 1 commercial building and 3 condos, soon to be 2 as I just sold one that is in escrow. We have 2 units in Folsom, Ca which is a middle-upper end community and the units have been fantastic rentals and will continue to be for the long haul. My only play here would be to sell while the market is high stock pile cash and then buy when the market crashes. I am not sure if it makes more sense to sell one or the other or just not sell either. First unit is a 1/1 we paid $135k for it and it’s worth $290k. We owe $103k. Monthly income of $340 on $1650 rent. 4.25% loan with 11 years remaining. Second unit is a 2/2 we paid $287k and it’s worth $355k. We owe $265k. Monthly income of $390 on $1994 rent. This was a personal residence that went through a loan mod when things were tough and was converted to a 40 year mortgage to lower the monthly payments. We still have 35 years left at 4.75% So for that reason I dislike. I would prefer to keep the 2 bed/2 bath because I think they rent better than 1/1 although we have never had trouble renting either. My mind changes dad by day if I should keep them or sell them. If I sold my 2/2 I could just about pay off my 1/1. The other unit I am selling was owned outright and made us $1200 per month. We are in escrow to buy another unit which will do the same. So if I sold my 2/2 unit would get around $75k after fees/taxes (I can avoid most tax on this unit). Then i can pay off the 1/1 which would give us $1250 a month and $1200 a month from the two condos. Part of me wants to de-risk by paying the mortgages off before this market crashes. We are both 33 and have income that is affected heavily my the real estate market. So when it crashes we will be making much less. On the flip side I can sell my 1/1 which has a lot more equity and pay a sizable amount to the loan on the 2/2. Thoughts?!?!? Thank you in advance.

I am considering originating a long term mortgage on one of my rentals. I do not need the cash, can earn 5.5% and will get a little cash as the down payment. Pros and cons? Here is the background. I’m all in on the property for $105k Rent is $1200 per month plus the renter pays all the HOA and property taxes, maintenance etc. they pay everything and I collect the $1200 per month. I have rented it for 5 months so far. I can sell it for $159k the buyer has 10% down. I would do a 30 year mortgage at 5.75%+/- Found several loan service companies for $30 per month. Does it make sense long term? Any sources stories? Do’s or do not’s. I know the basics- sell and reinvest they money,etc. more curious to know if anytime has done this thinks it worked well for them and why. Or why they would not do it again.