All Forum Posts by: Joe Caiola

The home has appreciated from $315K in 2016 to ~$450K in 2019, and my rent is cash-flowing positively. The area has exploded with development and growth, but as more and more new properties flood the market, I'm not sure if the growth will continue at this rate. One positive clearly is that that my equity has increased a lot. That said, when analyzing the total value of my equity compared to when I purchased it, the ROI actually decreased due to the amount of capital tied up in the investment.

I lived in this home for 3 years prior to just renting at the beginning of this year, and it's also in an "opportunity zone". So if I wait until 10-years of ownership, I can sell tax free (I believe). If I sold now, I still think I can claim primary residence though and avoid tax up to $500k.

Curious what some folks think makes the most sense. Take chips off the table and reinvest, refinance to pull equity out, or keep payment low (without refinancing) and just ride it out for years to come.

Appreciate any insight,

Joe

@Hoang Bui - I just finished building my first spec house from the ground up, and worked with over a dozen different sub contractors. You've gotten a lot of great advice from members above. One of the most important things I would do is have an agreement signed between both you and the GC. You wanted very detailed things drawn out and agreed upon up front. 

Arguably most important, the amount of payments (aka - draws) due over the course of the project. I'd recommend something like 10% down up front, and then a certain percentage for the completion of each project. For the smaller things (like the bathtub & toilet), they can get baked in to the painting payment. The contract should also include their business name, License number, and workers comp number. Some people might say it's overkill, but this will show them you know what you're doing.. 

Tough to say not meeting these people, but I wouldn't go with anyone "wishy washy". If you go with option 2, make it a point to be on a site a little more to oversee their craftsmanship. If you go with option 3, I'd let him know he was the most expensive bid, and that you're expecting great work - and also poke your head in regularly.