All Forum Posts by: Matthew Brand

I am moving states and just have one rental property right now. I'd like to sell the property so I can invest in where I'm moving to and not deal with long-distance maintenance. My current renters have expressed interest in purchasing the property next spring (when they have enough money for a down payment). So, I'd prefer not to sell the house out from under them and just sell it to them in ~6 months.

I'm wondering what people have done in this situation? Could I potentially adjust the lease so that they pay $100 (or so) less per month and they're responsible for any maintenance issues? Other ideas?

A lot of advice on BP says to create an exit strategy before diving in deep. When I look for resources on this it's all different forms of how to get rid of the properties. To me, that's less important than knowing when to exit. I'm more thinking about it as exit triggers instead of exit strategies. I'm thinking it could be something like "sell the property if I'm not able to have break even cash flow".

Does anyone have any advice on when you should plan on exiting (other than death or retirement)? Are there any resources on BP that I'm not finding? How important is it to define this before diving in?

The $328 are my actual expenses over the lifetime of me owning the property. For instance, we replaced the water heater a few months ago. One thing I'm not sure is "fair" is that I'm including the closing costs we paid in the beginning as part of the "monthly" expenses that I've averaged out. The $300 is just an estimate based on my other property. 

Thanks @Laniece Miller I just realized I was having a MAJOR brain fart.

I'm trying to understand the 7 years to 7 figures doc (https://bp-v-newproduction.s3.amazonaws.com/upload...) and I'm a bit confused how the equity is being utilized. Specifically, in year 5 when you're trading up to the apartment complex, he says you have $175k in equity, which is true. However, you also have $173,400 in debt. So, your net is less than $2k. Don't you need to pay back those loans once you sell the other units?

So, it's saying that, for whatever reason, the seller is selling it at a large discount? Why would this generally be the case? The few reasons I can think of are: inexperienced seller, quick need to sell, owner died and it's part of an estate sale, foreclosure and the bank just want to get out.

I was reading through the 7 years to 7 figures doc and it called out that you should only be buying properties if you can get a 20% discount. I'm a little confused how you know what an appx discount is on the property. Real estate doesn't have a sticker price, so you can't necessarily say for sure that it's a 20% discount. Is it saying you should buy it for 80% of what you think you could sell it for after some improvements?

Thanks for the help all! Sounds like the universal sentiment is to sell the properties.

@Dave Foster the hot CO market is another one of my concerns about selling these properties. I have about $100k in equity between the two ($70k in primary, $30k in rental). That's only going to be able to buy a $500k place (assuming buying with 20% down) in CO which doesn't go very far.

I currently live in Omaha, NE and am planning to move to Colorado. I currently have 2 properties, 1 as a rental and the other is my primary residence. I'm trying to decide if I should keep these two properties or sell them and use the equity to buy real estate in CO. We're not planning on getting a property management company because we have some local folks that can help out for minimal cost. Some details on the houses:

Primary residence

Mortgage is a 15 year mortgage (with a 3.5% interest rate), so my payment is a bit higher than if I had bought it as a pure rental. It'll be paid of in 11 more years. As you can see below, the cash flow is pretty bad. However, if this were on a 30 year mortgage, the cash flow would be at least $100 higher.

Monthly mortgage payment: $680

Monthly taxes & insurance: $370

Estimated monthly expenses: $300

Estimated monthly rental income $1,400 (might be able to get more, not sure)

Estimated monthly cash flow: $46

Rental Property

I bought this property without fully understanding the types of deals I should be buying (which is something I'm trying to learn now). It's a 30 year mortgage with an interest rate of 5.25%. This house has had more issues than my primary residence, so the expenses have been quite a bit higher than expected.

Monthly Mortage: $543

Monthly taxes & insurance: $308

Average monthly expenses: $328

Avg monthly rental income: $1237

Monthly cash flow: $90

Overall, should I just attribute these to sunk costs and sell them and use the equity elsewhere? The part that I really hesitate on is my primary residence has a stupid good interest rate. These don't feel like terrible investments but they're definitely not the greatest.

That helps, thanks guys. The cash on cash return for my rental is about 12%, nothing great, but I still think pretty solid. I think it makes sense to target that number instead of the other two. At the very least, 15% seems feasible if I'm more diligent about finding a property.