All Forum Posts by: Michael Cai

$10k/year return on $400k equity is absolutely terrible. If you find a multi-family with 10% cash-on-cash return,  thats $40k/year. Or you can get a 2 year bank CD with 5% guaranteed return. You sell right now you don't pay taxes on the gain. Thats $75k savings right there. And today houses are still fetching near-covid pricing despite soaring rates. Selling is an absolute no-brainer to me, and I am surprised by some of these responses.  Losing the low interest rate is the only drawback, but I think the tax-free gain more than makes up for that.

My first CA rebtal home in Folsom, I bought it for 255k in 2012. I rented for 1750$ and broke even on cashflow. I took a 15 year mortgage, refinanced at 2.25 pct and only have 40k left on the original 205k loan. I paid off a few 100$ a month once in a while . Property is worth 700k and rents now for 2850$ with 1000$ cash flow.  In 2 years I will own it clear. I don't plan to refinance,  the cash flow of 3000$ is what I seek. There is no need to keep chasing volume in assets, I have 2 other sfh in folsom that will be paid off in 10 years. Cashflow is not king, debt free with high quality growth assets is the king.

@Michael Cai Absolutely- you can still access most of that equity tax free if you keep it, and I assume you haven't had a buy and hold rental before? If not, you haven't even begun to experience the tax benefits and they only get better over time. 

Yes- keep it, and if you want to scale, get a HELOC before you move out and begin your journey. Don't miss the forest for the trees- there are thousands of people here who are kicking themselves for selling their primaries and flips without really considering finding a way to keep them.

Always asset Quality vs. Quantity for long term wealth. Listen to people whose net worth is more than yours. 90pct of the cash flow crowd make less money in real estate than someone who has a class A property and gets increased cash flow as rents go up and gets appreciation as well over time.

You have couple of years to decide on selling to get primary owner tax free capital gains. Now is a bad time to sell as buyers are burdened by high interest rate. You know the area, self manage, find a qualified tenant with good income and credit history who can sign a 2 year lease. 

There's no question here- keep it 100%. It will be cash flow positive, you have an interest rate that is a quarter of inflation- you'll never see rates like that again. You can depreciate it, you can leverage your equity and scale your portfolio. 

Think of it this way- almost any investor looking at deals today- if they saw the numbers you ALREADY have on this house, that would be a grand slam deal. 

Finally- you don't get free by selling your assets, you get free by keeping them, Don't lose sight of the prize and take the quick payoff VS the life changing, slow burn.

Best of luck!

There's no question here- keep it 100%. It will be cash flow positive, you have an interest rate that is a quarter of inflation- you'll never see rates like that again. You can depreciate it, you can leverage your equity and scale your portfolio. 

Think of it this way- almost any investor looking at deals today- if they saw the numbers you ALREADY have on this house, that would be a grand slam deal. 

Finally- you don't get free by selling your assets, you get free by keeping them, Don't lose sight of the prize and take the quick payoff VS the life changing, slow burn.

Best of luck!

 sell and move most of the asset to debt/note/specialty financing.
This "good problem" could only worse in the future.

At certain times folks would be mature enough to convert from "equity investors" into becoming a lender in themselves.
When you convert to become a lender, even if the SF asset goes into default, you still make money after the foreclosure proceeding.