All Forum Posts by: Emanuel Caldera

Central Park is a great location, you have a very low interest rate and high cash flow, so I'd hold personally. One thing to consider however is capital gains taxes. Seeing as this was your primary residence, you may be exempt from capital gains taxes on the first $250,000 if you are single and $500,000 if married filing jointly. You need to have lived there for at least 2 of the last 5 years however, so if you recently moved out you'd have just under 3 years to sell. I'd probably hold another few years and then sell. I have some clients in Central Park, I'm bullish on the location over the next few years. I think there's still a lot of upside potential there (probably not what we've seen over the past few years but the area is still improving and likely to continue seeing good appreciation). https://www.investopedia.com/a...

 A couple thoughts:

1. You can't do short-term rentals in Denver if it's not your primary residence. A Central Park (Stapleton) area home would certainly do well, but it's not eligible under the Denver Airbnb rules. 

2. You should be able to get more than a $200 premium on that house by converting to a medium-term rental. I do think there's more demand for smaller MTRs -- 2br, maybe 3br that two traveling nurses or a couple that's remote working would use. But we've got a 4br/2ba medium-term rental in Colorado Springs. We're getting about 35% more than we would as a LTR. You attract more families that are A) moving to the area and don't know where they want to buy yet or B) families displaced by a major renovation on their home for 3 months.

Only an extra $200 a month for an MTR or STR? That number seems very low. My fiancé and I run 3 airbnbs right now in Westminster, and they do extremely well vs what we could get as an LTR. How many bed, bath, renovated? There are a series of hospitals over there, and you could crush it as a medium term rental. Check out furnishedfinder.com to see what MTR's are going for in your area. Then, check airbnb and see comparable STR's to yours in your neighborhood. Look on their calendar and see how booked they are, and what their going rate is to give you a ballpark idea of what you could get. Also, if you do consider an STR, you need to follow Denver's laws which is owner occupied, and requires a license. Read more below.

https://denvergov.org/Governme...

Feel free to give me a call if you have any further questions, I'd be happy to help.  720-885-5362.

@Emmanuel Caldera

A couple initial questions you should ask yourself.

1. What type of rental are you doing right now? LTR, MTR, or STR? If you are doing an LTR, look at what an STR may cash flow on the property. Instead of selling, maybe you maximize your cash flow that way.

2. What part of town are you in?  Pulling data on what the equity growth may be in future years by looking at previous years median home price (by year) in that area, may be a good indication of where to expect your equity to go.  Hence, does it make sense to sell in that particular area if you can expect significant equity growth in the future. 

3. What is your current interest rate on your property now?  If you have a low rate, and you sell it, just know you'll have to now buy in a market with 6.7% interest rates for a 30 yr fixed mortgage which makes it even tougher to cash flow.

My advice is to analyze your current areas potential growth in future years, wait until rates drop, then you can explore either selling or doing a cash out refi in which you can pull money out to go buy more properties at that lower rate. Also, take advantage of an STR or an MTR if you are capable in your area. You will net much more cash than an LTR.

Hi Emanuel,

You're on the right track with your thinking, just follow the questions a little farther. What was your cost out of pocket to purchase the property? What is your CoC return? Cap Rate? If you have a solid property with your current metrics, don't rush to sell a good thing. You may want to talk with a lender to get your ducks in a row so you are not committed to a loan but you are able to pull the trigger on a property on your terms. It could even be a possible 1031 exchange situation.

Why would you get rid of a property that cash flows $350 a month? 

The only reason an investor should sell a property is to invest in bigger, better properties to increase earnings or wealth.

Do the numbers and make a financial decision, not an emotional one.