All Forum Posts by: Viji M.

@Viji M. congrats on having a paid off property. This is not the kind of problem most Americans have! In your shoes, I would ask several questions. Is the goal with rental properties to create immediate financial freedom, or is it to provide for retirement as part of a diverse investment strategy. If you decide to re-deploy the capital, what is your tolerance for investing out of state? Do you have interest in purchasing larger assets like apartments, commercial strip centers, etc?

My personal investing philosophy has revolved around leveraging the equity I have/have created in order to purchase more properties. I am a big fan of this "value add" investing strategy, but everyone has a different risk profile.

Hello John,

Thank you for sharing the insightful questions, they are helpful. Immediate financial freedom is something I am working towards. I am hoping to bring in enough cash flow so I don't need to have a 9 to 5 job. I have some experience and quite enjoy adding value to properties (I have done so to my current residence).

-Viji.

0 Votes

Originally posted by @Thomas S.:

In your situation having a paid off property is only compounding the problems on what is actually a very poor choice for a investment income property.

At a value of 350K and realistically assigning a opportunity value of 10% to that equity it is costing you $2900/month in lost income on your cash. With rent at $1350, expenses at 50% your overall position on this property shows negative return in the range of $2200 per month...give or take.

Your feelings of losing out are spot on. You should sell this property since rent at $1350 on a 350K property is about 2K below what it should be to produce positive cash flow on a leveraged property.

Leveraging the property to put your equity to work will not improve your position with your rent as low as it is. This is a extremely poor investment and it would be to your advantage to sell it asap before the value of the property is impacted by a market correction.

The sooner you sell this the less money you will lose.

Hello Thomas,

Thank you for your input and showing me the numbers to quantify the loss. It has inspired me to look into the situation actively. I will be putting the property for sale soon.

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My name is Viji and I am CA. I had purchased a condominium 15 years ago as my primary residence with a 15 year loan. I have since rented the condo and now it is fully paid off. I will be able to move back into the condo in two years but I am also thinking if I should sell the condo and reinvest in a bigger property.

I am open to all opinions. I am happy I have paid it off but stumped and wondering if it's the right thing and what options may be better as the rent is not bringing enough returns for the property value. Current property value is about $350K and rent is $1350 with an association fee of $270 per month. I feel like I am loosing out on this. Please share some of your ideas.

1 Vote

Congratulations!! Wish you luck in reaching your goals.

1 Vote

All Forum Posts by: Viji M.

Viji M. has started 1 posts and replied 5 times.

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