Risk tolerance factors.
Need to know more about YOU and YOUR wife. Don't answer any of the following questions.
What is your age?
Do you have kids? Is College fund set aside?
Do you own your house?
How stable are your jobs?
What are your investments? Any retirement plans?
Are you tired of REI?
You joined BP in 2016 and this is your only post. You have three REI investments, so you are a Seasoned SFH investor. Timing was great for making the investments.
etc etc.
Investment Strategy Past:
Real Estate: All of your calculations you didn't tax effect your returns. I love the 2 primary out of 5 years no taxes on your property. Can't beat that with 5% down and no taxes. $280k today, less 2013 cost $145k (downpayment plus debt)= $135k less the original say $7k downpayment= $128k x at 0% Tax= $128k. Go live in your other properties for 2 years each. Thats a guaranteed return.
Stock Market: Let's use the DOW 2013 say 13,000 for easy math. Today 34,000 for easy math. $10,000 say down payment (5% for easy math), but you invested at Dow 13,000; becomes $26,000 less the original $10,000 = $16,000 gain, then you pay taxes.
Normally, you can never go back in history, but. I'll give you the Dow performance, which no one would have ever imagined and give you the $16,000 return, if you will give me the REI return of $128k. I'll even pay you an extra $50k.
Investment Strategy Future:
Stock Market: To get the same Dow performance going forward from 34,000 that you realized since 2013; it has to go to DOW of 89,000. But as @Joe Villeneuve would say don't follow the percentages. Use dollars, so this is probably not comparable. But you're looking for returns and probably thinking percentages. Will the DOW get to 89,000 in the next 10 years (2013 to 2022 comparison)?
REI- Sell all of your houses and achieve say the $128k for each. Might pay taxes or not depending on if you live 2 years in them. Let's say $128k x 3= $384k. But we don't know if you will live there, so say $250k cash. Now you have many options. 1. Sit tight for just 6 months and pick up distressed properties. Know people say you can't time the market, but I disagree for the next six months. 2. Interest rates are too high, use the cash to pay down your upfront collateral to get your payment lower. Which I disagree with. 3. Move up to an MFH., 4. Take some cash off the table to your items noted above., 5. If it was me, I would take the $250k and triple it in the next 5 years in REI. Or Quadruple in 2 years, depending on the REI product. (Look at Commercial). If you stick with houses, you will need your $280 house to rise to $540k ($280k/$145k x $280k) in the next 10 years. Say interest rates stay in the 6% range for the next 10 years; don't think it will make it to $540k. Plus, Wood and Steel prices have come down to about 1/3 from a year ago. Builders should start to add to inventory, reducing pressure over the next 10 years. Plus, Baby Boomers will be (are) moving out of houses into Rest Homes at a larger rate than new 20's-to-40-year Olds join the population, adding to the housing inventory.
Current Negative Cash Flow- You shouldn't personally care financially. Your making $250k per year. The three properties at 15 year loans, say 4% interest should be around $3,500 per month. You should be able to handle if no tenants. But with tenants, you're paying down the debt and banking around $2,800 per month. And as you have mentioned you're not paying the $2,800; your tenants are. You can go through the weeds and get more precise figures.
Current Negative Cash Flow- if your concerned about it from a management success standpoint, just refi to a lower payment. You're not the typical investor that has to make each deal Cash Flow, especially when your banking $2,800 per month. You only have 6 more years to go on your 15-year terms.
Recommendations:
What I see is your tired of REI. Sell and get out.
Or your tired of REI plus your Day Job. You're at that magical point where you quit your day job and go full time into REI. Yes, you might take a pay cut initially, but this might be a great time depending on your life status. Be careful though. Was it just dumb luck on your REI timing or was it your REI experience. Remember this is your only post on BP since 2016.
Congratulations on your success. Stop and enjoy your success. Thats my pineapple growing below (I'm in Iowa). I could have re-invested, but decided to buy something I enjoyed.
