All Forum Posts by: Tristan Toliver

@Noah Chappell thanks Noah! Great point with selling and the 1031 exchange. I would more than likely putting myself in a bind if I were to go that route. I am going to hang on to this property and keep it as a cash-flowing rental for now.

Question: Is there a reason you like cash out refis over HELOCs? I'm guessing it depends on terms and whether it's a primary or investment property but curious to know your thought process on deciding between cash out vs heloc?

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@Ozzy Sirimsi crazy seems to be an understatement! Couldn't agree with you more. I am going to hold on to the property and utilize the HELOC for a cash deal and possibly look at Hard Money and use the HELOC as my downpayment. Thanks for that insight Ozzy. I see you are in the Baltimore market too, so I just sent over a request. Would love to talk real estate with you soon!

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Originally posted by @Michael Plante:

When a property appreciates I ask myself would I buy the place at that price for what I get in rent

if not I would sell it and use the money for something which performs better for my goals

That's a great and simple way to look at it, Michael. I'm all for simplifying the way I make decisions and processes so thanks for that!

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@Ivy Infore Thank you for the insight, that is great information! Equity was determined by an appraisal done by the bank. That stat about homes with a price reduction being on the market 3x longer is great and speaks to today's market conditions and all the things that come with that. Definitely does factor into the decision making. Thanks again for the comment, Ivy!

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Originally posted by @Steve Vaughan:

Originally posted by @Tristan Toliver:

Hello all!

Last Saturday marked the 1 year anniversary of the purchase of my first investment property. Definitely a lot of ups and downs but I'm glad I went through with it. With renovations and market appreciation, I'm now looking at $250K of equity in the property. I close on a HELOC next week and my plan was to use that money to invest in more rentals in the area. But I recently came across a listing that was sold at the end of 2019 and is now back on the market for nearly 3x the purchase price. It made me think if selling my property and using that money to invest elsewhere (in or out of state) would be a better idea? Or maybe trading up with a 1031 exchange? Would it be beneficial to sell for any reason?

The way I look at it, keeping a cash flowing rental and still being able to use the equity with a HELOC seems like the ideal situation. But I'm curious if others have a different perspective. And if you were in my shoes and my age (mid-20s) what would you do, knowing what you know now?

I'm sure there are a lot of different factors but any insight is appreciated. I'm still new to real estate and always looking to learn. Hoping this can strike up great dialogue.

Thanks!

Good problem to have so young. Congrats!

This answer will be asset and area-specific. I have one I'm keeping but has enormous equity. It is in a growing area and earning it's keep with an ROE of over 7%. To replace it would cost too much and be too much effort.

I have another one in a rural town that caught the growth bug. I was floored at its value and the equity is not earning it's keep. Rents cant keep up and probably never will. I also don't see the area and market having much leg left. I am exchanging it now to a similar asset type closer in. A cash-out refi or LOC may be an option if those key factors were different.

When it's time to fold 'em, the decision is usually as obvious as it was for me. If this asset is in the path of progress and in your backyard, earning at least a 7% ROE, I'd hold. Too much cost and effort to make a move.

Thanks Steve! I appreciate that.

Sounds like we have similar viewpoints on this topic too. Based on your feedback, I think holding on to the property would be my best move unless I am able to roll that money into a better deal. Definitely want to make sure I can keep the momentum going so I'm trying to treat the next move as carefully as the first so I really appreciate the insight. Thanks again!

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Originally posted by @Sean Ross:

@Tristan Toliver congrats on your investaversary. That's really really cool!

My preference is always to know how to compare investments before considering any move. This may be redundant for you or it may be new, but calculating return on investment for REI is critical.

Matt Frankel at Millionacres is my go-to source here. Try this article he wrote for Madison.com (https://madison.com/business/i...)

This includes a reasonable calculator at the end of the article.

If it makes sense to sell and upgrade, you should almost certainly consider a 1031 exchange.

Hope this helps and keep on keepin' on!

Thanks Sean! Excited for what's next. And thanks for that resource. I want to get better at calculating ROI to the point where I am able to do it just looking at a property so a calculator like that is extremely helpful. I will definitely be looking into 1031 exchange too and see if that is a good next move. Thanks again!

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Originally posted by @Alex Olson:

Originally posted by @Tristan Toliver:

Hello all!

I'm sure there are a lot of different factors but any insight is appreciated. I'm still new to real estate and always looking to learn. Hoping this can strike up great dialogue.

Thanks!

We call this trapped equity. You can't do anything with it but you can sell it and invest in a cash flowing market in the midwest or the market I am partial to, KC. You can turn $1mm into $4mm pretty easily and it cash flows well to make a good income. Hope that helps

Thanks Alex! That's exactly what I was thinking. Investing in a cash flow market like KC. The market that I'm in, Baltimore, is similar in terms of cash flow but there are other factors that might make Baltimore not the best place to invest. So I'm considering the risk associated with this market from a long-term perspective.

Curious though, you mentioned "trapped equity". Would it still be considered trapped if you are able to take out a HELOC or Cashout Refi as opposed to selling? What would make the equity trapped?

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Originally posted by @Dave Foster:

@Tristan Toliver, The key metric will be a comparison of the property as performing now vs it's performance after heloc is tapped. If it's still worth keeping after increasing debt then hang on to it. But if putting debt on it reduces it's performance too much it's a better deal to sell and 1031.

The only joker in that line of thought is that it may be worth hanging on to a low performing property if the potential appreciation is there. Otherwise there's no real reason to hang on to an under performer just because it has debt capacity.

Thanks, @Dave Foster. That's great insight! The HELOC does not do much for eating at the cash flow and the area is appreciating. So I think long-term it will be a good move to hold on to it. I agree with your line of thinking and appreciate the feedback!

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Thanks @Dmitriy Fomichenko!

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Thank you, @Bruce C.!

I am super excited to see the hard work within the past year pay off. And yes. I plan on using that HELOC as a downpayment on the next property. However, I'm debating just using it for a downpayment on an investment property rather than a house hack. In my market, I can put 20% down at about 30K-60K on a 2-4 unit. Still planning for the next move so I'm open to a lot right now. Thanks again for the response!

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All Forum Posts by: Tristan Toliver

Tristan Toliver has started 6 posts and replied 40 times.

Post: 250K of Equity - To Sell Or Not To Sell?

Post: 250K of Equity - To Sell Or Not To Sell?

Post: 250K of Equity - To Sell Or Not To Sell?

Post: 250K of Equity - To Sell Or Not To Sell?

Post: 250K of Equity - To Sell Or Not To Sell?

Post: 250K of Equity - To Sell Or Not To Sell?

Post: 250K of Equity - To Sell Or Not To Sell?

Post: 250K of Equity - To Sell Or Not To Sell?

Post: House-Hack Home Run - Real Estate Is Amazing!

Post: House-Hack Home Run - Real Estate Is Amazing!