All Forum Posts by: Layne T.

Curious as to opinions on this situation, there may not be a 'right' answer but sometimes others' thoughts help open up new ways of thinking.

-Own a rental in Miami/Ft. Laud area
-Cash flow is minimal, $300 a month
-Selling now would allow opening up of equity to redeploy in another market with over 2x the cash flow for a new build
-New market won't appreciate as much as FL though (not even close)
-Current home will likely get hit with higher taxes, insurance etc. in coming year and years to come
-Biggest reason to consider just keeping current property? FL appreciation - property is still fairly newish and don't want to miss out on potentially solid capital appreciation in next 5-10 years - assuming that happens
-Other caveat is ability to sell in coming few months without paying any capital gains taxes, which will not always be the case

There is no crystal ball, Appreciation is/was the goal but who knows if that will happen and at what rate realistically with increasing costs of ownership here. What else would you consider before making this keep/sell decision?

Thanks - 

NC BP Team,

Could use your advice. Doing some research in 2-3 states and wondering what are the best areas in your state to look at properties for purchase that would encompass most of these:

-Ability to get a few acres (don't need 100, but say 3-5)
-Home that can come with land suitable for small hobby farm/homesteading type stuff (couple of horses, maybe small garden, etc.)
-Solid neighbors that look out for one another
-Not a poorer, declining area 
-Far enough from cities to be left alone/not have any city grittiness but also no more than 45-60 mins away from hospitals, groceries, etc.
-Homes that aren't falling apart/need major rehab on the property
-Prices in six figures overall not seven figures

What 2-3 cities should I really pinpoint in terms of the Zillow map to get an idea of some great options?

Great feedback, thanks all. 

@Brett Synicky - it's not that's it's too complex, it's just a hassle / still complex and I don't want to hold property in a SDIRA. The older I get I want more simplicity not less.

Some great feedback, appreciate all your comments.

@Bill B. - Yes I can feed the new house a few hundred a month. And potentially moving into it one day as a forever home is also an option.

@Staci Rogers - Long term plans would be keep the newer home as a forever home, and it's in a warmer climate so assuming less repairs of the busted pipes variety, etc. Had one happen during Christmas (Indianapolis) with the older home and wasn't fun to deal with it all. Are you referring to a home equity LOC or cash-out with question 4? As a lender, how would you say those options compare with a brand new investor loan in terms of rates/costs? Definitely an interesting option.

@Dave Foster - if I do sell/1031, you're my guy, your reputation here is phenomenal!

Curious as to thoughts on cashing out / paying penalty on a traditional 401k for a rental property. 

Specifically NOT talking about self-directed IRA's and the complexities that come with those. For sake of argument, let's keep it simple, cashing out a traditional 401k, paying penalties/taxes and using balance to invest in rentals.

Anyone done it/feedback? Regrets, no regrets, etc?

Thanks

Hi BP Team,

Curious as to if you can add any other nuances to my decision making below.

Current Holding - Midwest home, for sake of ease let's estimate 100k of equity within a 200k value. Let's ignore closing costs/broker fees etc. for now. Cash flows a few hundred bucks a month, nothing significant. 30-year old property.

Potential Transaction - Trade in/1031 this property and move that 100k into a 400k value nicer/newer property. Would break even/no cash flow.

Current Holding Pro's of Keeping - 100k of mortgage left gets paid off eventually, resulting in pure cash flow (net of taxes/insurance/etc.). Much faster paydown. Cons of Keeping - older property, roof has been replaced but there will come a time when pipes start freezing/bursting with age and eventually will have to keep patching those or do a full gut that won't pay for itself.

Pro's of Newer Property - Newer build, start time clock over again on key component repairs, higher chance of appreciation. 
Con's of Newer Property - Zero cash flow to start, and won't be getting paid off anytime soon with higher cost.

What do you think?

Thank you - 

Hey @Cody Smith

I think his point was (and I tend to agree) hold on to the property as long as it's not being a PITA (good property good neighborhood good tenants) and build the real estate portfolio with creative financing (including HELOC, etc.) and enjoy the appreciation from TWO properties not just one (the new STR). Also, AirBNB's can be finicky. You'll be happy you have stable cash flow coming should another black swan type event like Covid hit again.

Great questions and research though!

In general I agree with Greg above.

However. Some nuance.

If you and your wife have 401k's where your employer matches contributions, you should max those out to the level where they match (i.e. if they give you 100% up to 3% of salary, put in 3%). The rest I would also vote put towards real estate.

Congrats @Angelica Morales that's a great success story!

If you can handle illiquidity, multifamily syndications.