All Forum Posts by: Priscilla Y.

@Matthew Perimian yes, I am planning on talking to a few property managers as well as real estate agents as I’ll be heavily relying on them on my properties. As for my tenants, they told me they have already pre-qualified and have been house shopping for some time. My townhouse is slightly on the top of their budget but they are willing to stretch for it. Since I’m an agent I’ll make sure they are all good to go before moving forward. The biggest question is what are we gonna buy next if we decide to sell it to them... and I don’t like being pressured on finding something just to rollover if I didn’t do my homework already and know clearly my next plan of action will be.

@Anthony Petrozzella Thanks for starting this great thread! Lots of info here and helped me understand better of the area... we've yet to make our trip to OKC to see the area ourselves!

@Alex Waugh Would you mind me connecting with you about who helped you setup the LLC? It's our first out of state investments and would like to setup an LLC to separate them from the rentals we have here in CA...

@Jaysen Medhurst The numbers you listed seems to be very good. But could you please share an example in more details? Sorry I'm a bit slow in this. The last two rentals were our primary residents before that turn into rentals when we move to another property. So we've always been looking at buying a primary residents. I'm reading through the forum here trying to learn more but my knowledge have been very limited to our local area residential market. It's hard to imagine, buying a $2.4m property with $600k down (25%), means a $1.8m loan, so with PITI, I'm looking at about $10k per month on expenses. So to have $5k cash flow, I should then expect the rent would be $15k/month? What kind of property and area have that kind of potential? Sorry that in SF Bay Area, a $2.4m home is just an average 4 bedroom SFR home in a good school district, that can probably produce about $5k rent per month at max... You can tell how little I know about the world out there :(

@Jason Turgeon I'm glad all the hard work pay off. After seeing Shawn putting out the number for me, I'm now convince that I'm just sitting on a bunch of cash that could have so much more potential than just relying on the market appreciation. It's almost like keeping the money in a shoe box under my bed (not that I do that) than investing in a good stock/mutual funds. However, with young kids at home, it's hard for me to be managing rehab or any kind of non turn-key thing on my own that is out of state. My husband is not very keen on flying alone, and also I have more real estate knowledge than he does. I'm a licensed Realtor in CA for 16 years, but not doing this full time currently. So I'm doing most of the research, evaluation, process, etc... I guess when my kids are older and I have more experience in multi-family properties, I should be able to adventure into more challenging investments.

@Shawn Regnier wow, thanks for putting that into a clear formula for me to see. I always know the cash flow sucks, but didn't think of it that way. And the worst is that, we are actually sitting on more equity than what you estimate. We had put in 30% down to keep the loan amount conforming when we purchase it as our primary home 10 years ago. And we are now sitting at about $650k equity. Ouch! That's why if we are selling it to our tenants, it'll have to be 1031, there's no way I'm paying Uncle Sam anything now. The problem is nothing that I buy here in the SF Bay area will make sense in terms of cash flow. Need to research a lot more to find something out of area for the exchange...

@Tony Kim Thanks for sharing your story. The Bay Area is not really good at finding properties like that. The poorer neighborhood all have rent control and it's not the most ideal place to buy a rental property. Our townhouse was at an up and coming neighborhood and thus the appreciation was nice, but just as any homes in the Bay Area, things have gone up a lot the past few years, I don't know when it'll plateau, or it'll ever be. We have a lot of overseas money from China buying homes left and right, I'm sure it's the same situation in LA area as well. This is why most homes here doesn't make any rental sense... really have to look harder at other areas.

@Dave Foster Thank you for reminding me that 1031 exchange is just a tool. I guess I got hung on it associating with any of my investing strategies. I guess bottomline is if selling my townhouse make sense, and if I have a better option with that chunk of money for a better investment. I've been following that OKC thread recently as well. Last year when I first heard about OKC I couldn't quite find many discussions about it, but seems like it's getting hot right now. We were introduced to it by a friend who has been buying out of state properties after attending some seminars. So he got connected with those "one stop shop" team that builds and sells rental properties and help connect with their property management and other services. I saw people mentioning other team as well in the area and I will be reaching out to those to see what other options are out there.

@Jaysen Medhurst So here are some numbers for considerations:

We've rented the townhouse for 5 years. Bought the house for about $575k and it is worth about $1.02m. Our monthly PITI + fixed expenses is about $2800, and collecting $3200 rent per month.

For the OKC properties, looking at $300k for a duplex, at 40% down payment, after all expenses, the estimated cash flow would be about $1100 per month per 2 doors. We are thinking to start with 4 doors if we are buying with our own cash, but if we are doing 1031 exchange, then we will have to roll over all $1.02m which would be 6+ doors, or possibly 7-8 doors depending on the property prices. This is something I'm not sure I'd be comfortable doing since this will be our first out of state investment. It seems to be too much money in a place where I'm still learning and no experience with.

Yes, we want to continue to be investors! We've own two rentals right now, and will continue to be doing that. The long term goal is to replace our active income so we can have the continuous stream of income when retired.

My husband and I have not been able to figure out the math on this and I hope that I can get some comments and suggestions from others. We lived in the SF Bay Area and own a townhouse as a rental. It had appreciated about 70% in the past 10 years. We are doing a bit better than break even but the amount is insignificant to be consider cash flow property.

We have some extra cash and have been looking into buying cash flow properties out of state. We have been doing research as it’s a big step for us, in the meantime, our tenant had approached us to see if we are interested in selling the townhouse to them. Now I’m not sure if we should do a 1031 exchange, and roll that into the out of state properties, or keep this longer and maybe find some other like kind properties in the area for appreciation. But even finding like kind in the area are not as appealing since we will have a jump in the property tax we have to pay. It will increase our monthly carrying cost if we do that.

My husband thinks that this is like “cashing out” on the gain and converting it into cash flow each month, and still be able to keep the cash we originally wanted to invest with us to do something else. However, I feel like it is different kinds of investment and the value where it lies is different. Out of state properties does not have the same appreciation rate as we have here in this market but provides good cash flow. And I do want to keep an investment property in the area to take advantage of the unique market here. I feel like selling the townhouse here and exchange into out of state properties is like killing the golden goose and just feed off of what its left.

To be more specific, we are looking into Oklahoma as some of our friends have bought properties there and have connected us with people who does this specifically.

I guess what I want to know is when is it a good idea to do a 1031 exchange? Or when is it a good idea to sell your investment property for something else?