Selling a rental property

[pronstar]

Thoughts on the above scenario of making $150/month? I'm not talking shit, I'm just trying to see the end game there. If I had 100 properties like that, sure it is fine. With only a handful like that, it seems hard to justify the effort.

No way I’m holding a rental SFH that flows less than $400 a month.

My business model doesn’t support that.

My simple model for the stage I’m at right now, given DFW market conditions and projections:
- 3-4 flips/year covers my salary.
- Additional flips are held as rentals.
- Once I reach a critical mass, additional flips will pay-down the mortgages. Then lather/rinse/repeat.

I don’t want hundreds of doors flowing $100/month. There’s too much overhead managing all of that.

I want fewer doors that flow a lot more cash.
I’ll be happy to own 20 doors that flow $2k each per month.

Cash-on-cash return is a thing.
And I’m not doing all of this work to make $150/month.


Sent from my iPhone using Tapatalk Pro

 

[LargeOrangeFont]

No way I’m holding a rental SFH that flows less than $400 a month.

My business model doesn’t support that.

My simple model for the stage I’m at right now, given DFW market conditions and projections:
- 3-4 flips/year covers my salary.
- Additional flips are held as rentals.
- Once I reach a critical mass, additional flips will pay-down the mortgages. Then lather/rinse/repeat.

I don’t want hundreds of doors flowing $100/month. There’s too much overhead managing all of that.

I want fewer doors that flow a lot more cash.
I’ll be happy to own 20 doors that flow $2k each per month.

Cash-on-cash return is a thing.
And I’m not doing all of this work to make $150/month.


Sent from my iPhone using Tapatalk Pro

This is inline with my thinking. I need to make the plunge into the right market to do it though.

 

[Cdog]

This is inline with my thinking. I need to make the plunge into the right market to do it though.

You’ll get your $500 a month in phx with 20% down.

 

[LargeOrangeFont]

You’ll get your $500 a month in phx with 20% down.

Are there properties around $200K that will do that?

 

[Cdog]

Are there properties around $200K that will do that?

Properties in the right area where I know you’re positive cash flow and gain equity will be in the $300-$340,000 price range

So figure $70,000 plus closing costs for the right area

 

[Cdog]

I rented this home out in less than 1.5 weeks after closing on the sale.

Calculate 325k purchase. 20%down. $1900 rent on 3bed two bath single story 1700 sqft home. It’s very area specific though. You’re not gonna get these rents in bumble fuck nowhere west, east or south side of town.

 

[Bpracing1127]

But you currently rent a home for your residence?

I’m renting from my in-laws right now. Plus for a smokin deal

 

[Cdog]

I’m renting from my in-laws right now. Plus for a smokin deal

Are you within the five-year window of living in the condo where you can sell it without having to pay capital gains tax?

 

[Bpracing1127]

Yes only been rented for one year since we moved out

 

[Cdog]

Yes only been rented for one year since we moved out

Sell it!!!!

 

[RiverDave]

Yes only been rented for one year since we moved out

To me I would keep that and pay it off. I’d also expect though if a pricing correction comes that I’d be riding it out the whole way

 

[Bpracing1127]

To me I would keep that and pay it off. I’d also expect though if a pricing correction comes that I’d be riding it out the whole way

Yea it’s sell it now or wait until I need the money. Currently I don’t need the money as we are not upside down.

I should sell it and put $$ down on a new dcb with 450’s lol

 

[Cole Trickle]

Yea it’s sell it now or wait until I need the money. Currently I don’t need the money as we are not upside down.

I should sell it and put $$ down on a new dcb with 450’s lol

Lets say the market swings and you want to buy a house. Do you have the down payment saved up without having to cash out or sell the condo?

If you have the cash for a new home down payment I would keep the condo long term. If you are underpaying market value on the wifes parents house I would absolutely be banking the money you are saving monthly by being there and throwing it into a down payment account.

You are only cheating yourself long term if you are underpaying rent but using the $$$ on toys,etc...

 

[LargeOrangeFont]

Yea it’s sell it now or wait until I need the money. Currently I don’t need the money as we are not upside down.

I should sell it and put $$ down on a new dcb with 450’s lol

I'd keep rolling with it, and sell it if/when you wanted to buy a house, as you probably are not moving in the near to medium term. Buy other property in the meantime, and it will be hard to not come out money ahead.

 

[Cdog]

200k tax free money for a future home of your own. I don’t know everyone’s plan but mine has always been start with my own home first.

4years & 1 month too late and you can kiss 30+% of that 200k in equity goodbye to taxes. California seems so volatile to me right now due to changing demographics and it’s ridiculous politics.

I have done well and made this my business.

” Know when to fold’em”

 

[Cdog]

Are there properties around $200K that will do that?

I have another tenant that needs a home in the area in November. Budget is 2k a month. Ready to buy?

 

[lbhsbz]

Sell it...your profits are shit.

I contemplated selling my place...and almost wish I would have...I’m $1000+ in the black every month after everything is paid. $300/month isn’t worth your time.

 

[Classic Daycruiser]

Should I sell my rental property? I moved away from my hometown of Victorville a couple years ago and now live in OC. I’ve been renting the home and been thru a few tenants. I am bringing in around 3500 a year in positive cash flow from the rental. My current tenant is buying a home so will be leaving in the next two months and is open to have the house shown while they finish out their remaining two months. This would be a perfect situation to show the house. If the home sells for what my agent thinks it should sell for (which is just under the comparable homes) I will net around 72k when all said and done. I’m not sure how the market is going to continue up there and think now would be a good time to unload it and hold onto the capital for future investment. My question: Is 72k worth it. The money will be going into an investment account until it’s time to use it for another home purchase.

Victorville.
I would cash out and put it in the bank,
If your OC home carries a balance, pay some or all of it off, and re-fi what you can't if interest rates are lower.

 

[pronstar]

Are there properties around $200K that will do that?

Properties in the right area where I know you’re positive cash flow and gain equity will be in the $300-$340,000 price range

So figure $70,000 plus closing costs for the right area

Or you can buy a distressed property wholesale, put sweat equity into it to bring the value up, refinance to pull your initial investment out at the higher ARV, then you’ll have a house with nothing out of your own pocket [emoji106]

Some call this the BRRR method:
Buy
Renovate
Rent
Refinance
Repeat

Know your market and know your risks.
I would never own a rental in a state like CA ever again - the laws skew to the tenants too much.

The laws are landlord-friendly in TX.


Sent from my iPhone using Tapatalk Pro

 

[Cdog]

Or you can buy a distressed property wholesale, put sweat equity into it to bring the value up, refinance to pull your initial investment out at the higher ARV, then you’ll have a house with nothing out of your own pocket [emoji106]

Some call this the BRRR method:
Buy
Renovate
Rent
Refinance
Repeat

Know your market and know your risks.
I would never own a rental in a state like CA ever again - the laws skew to the tenants too much.

The laws are landlord-friendly in TX.


Sent from my iPhone using Tapatalk Pro

That might work in TX for now. But you cant put sweat equity in a TX home from CA. In context to LOF asking about an AZ home. Totally agree with your CA comments.

When the market turns. Location will hold and the quality of tenants will remain.

 

[pronstar]

That might work in TX for now. But you cant put sweat equity in a TX home from CA. In context to LOF asking about an AZ home. Totally agree with your CA comments.

When the market turns. Location will hold and the quality of tenants will remain.

I don’t like the word “Can’t”.
I prefer “how can I do it?”
There are people I personally know who BRRRR properties remotely/in other states.

I know quite a few CA (and others all over the country) investors who are BRRRRing properties in the Midwest and South/Southeast.

It’s not easy, otherwise everyone would be doing it.
But it can absolutely be done.

Tons of info here if anyone is interested:
https://www.google.com/search?rlz=1....192.0j1......0....1.........0i71.uUKnDDYoQuA


The cool thing about real estate is, there are a million ways to make money. Find what works for you as far as risk tolerance and level of effort go [emoji106]

Sent from my iPhone using Tapatalk Pro

 

[ChumpChange]

Should I sell my rental property? I moved away from my hometown of Victorville a couple years ago and now live in OC. I’ve been renting the home and been thru a few tenants. I am bringing in around 3500 a year in positive cash flow from the rental. My current tenant is buying a home so will be leaving in the next two months and is open to have the house shown while they finish out their remaining two months. This would be a perfect situation to show the house. If the home sells for what my agent thinks it should sell for (which is just under the comparable homes) I will net around 72k when all said and done. I’m not sure how the market is going to continue up there and think now would be a good time to unload it and hold onto the capital for future investment. My question: Is 72k worth it. The money will be going into an investment account until it’s time to use it for another home purchase.

Can you still find a way to claim as owner occupied? Is it two of last five years or something like that? Is it the last two years?

 

[RodnJen]

200k tax free money for a future home of your own. I don’t know everyone’s plan but mine has always been start with my own home first.

4years & 1 month too late and you can kiss 30+% of that 200k in equity goodbye to taxes. California seems so volatile to me right now due to changing demographics and it’s ridiculous politics.

I have done well and made this my business.

” Know when to fold’em”

Only if you get your info from enthusiast websites. The California market is doing just fine. Big state, always pockets, but no shortage of buyers. Tough place to buy rentals for sure.

 

[jet496]

You have to look at the appreciation, when the market sky rockets, not just the monthly rental income.

If I had sold my first home 2 decades ago for a couple hundred, I would have missed out on it becoming a $600k property, and a steady reliable income stream, that is tangible, something you can touch opposed to stocks. That being said I do own a good chunk of stocks that I would not sell even if the market gets squirrelly.

I would never sell a property, or stocks, unless I was extremely desperate.

PS: In 20 years that one particular house will most likely be worth at least a million. Doesn't seem possible but I thought that when I bought it for $155K in 1991.

 

[bentprops]

Sell and take the 72k and buy 3 more in the mid west (land lord friendly), your cash flow will go to about 900 per month. rentals can easily make you 40% roi per year. Yes renters can suck but there is always a cost to make money.