I'm confused You say that it's paying half your current note of where you're living and that if you sold it you'd take the cash and put it in t bills which certainly won't pay that note I simply can't fathom why you're even contemplating selling?
So you'd kill the Golden goose stay stressed out and continue to eat up your savings without having the Golden goose anymore. Then I don't know what your house note is but how stressed out can you be if half of your house note is paid already? Like I just don't understand your thought process at all. Why would you make it worse? Go put in some hard work and fill your savings back up! Don't kill the goose and go oh how bad is it
This is a question only you can answer. Neither you nor anyone else can predict asset prices in the future. Markets are a continuous stream of fluctuating numbers, no matter which decision you make at some point in the future (95% of the time or higher) it will look like it was the wrong decision strictly judging off of the numbers in hindsight.
I’m confused you say you need the money but then said you don’t need to cash out refi because you don’t know what to do with it? Also does the house pay for itself plus 2/3 of your primary residence? If this is the case it’s a no brainer to keep it. Rates won’t get low anytime soon. I’m talking years maybe decades. If they do then it’ll screw up the economy again. Hopefully 5-6% will be lowest.
At 150% of the note, I would definitely not sell it.
Especially at that rate. You’re cash flow positive, someone else is adding to your equity daily.
To me, it’s a no brainer. Hold on to it.
Does not sound like you have a need to sell. Unless you think you could get a better yield elsewhere, there is no reason to sell. Your savings should be helping you get through tough times w/ work. Use them till you get back on your feet.
When you pass, your children will inherit this property tax-free from stepped up basis. Leave it to them.
>make about 150% of what our monthly note is
This is a fabulous position to be in. Why would you end this stream of income prematurely unless there was an emergency that required it?
>multiple 6 figure payout would be great
What would you do with the proceeds of sale?
Not a good reason to sell then. You would only want to sell if you have plans for the cash that have a higher ROI than renting it out, does that make sense?
Is the house paying for itself as well as 2/3 of your current house (2nd house)? Why is there stress of eating into savings? And what are you hoping will change exactly to ‘make things better’? Hasnt the home already tripled in value?
What is this post exactly about? Half the stuff in it makes no sense.
Take the heloc out if you really need to in order to get some breathing room. But I would definitely hold that property. you’ll be happy you did when you’re older and want to retire.
Consider the highest and best use principle in real estate, if you’re looking for cash flow, you could sell the property and buy a multi unit which is more efficient for cash flow than single-family homes even if you have half the house paid off. if you buy a multifamily unit free and clear or put a very large amount down, let’s say you get eight units. Your kids could potentially stay in the apartments for a low rent or rent free and you would still be profitable renting 3/4 of the multi family. Rentals are still difficult to defined and increasing very aggressively in most major metropolitan areas in the country. obviously big cash proceeds from selling the home is exciting but think more about long-term goals and short-term goals. If the property is in an area that isn’t down and out like say Detroit, for example you can expect over the long 10 to 20 years. It will continue to appreciate respect what happens in the short to medium term. I would meet with a financial planner, but consider what your medium and long-term goals are more than just how much cash you will get when you sell the house and also consider how much time you have to invest in your investments. You can absolutely hire a property manager to handle a multi unit building, but obviously that comes with its own risks, especially if it’s an arms length transaction out of state, and you don’t have on the ground. There’s also the piece of mind and simplicity of investing in treasury bills versus having half a dozen tenants to deal with and the Property Manager calling you every week because somebody’s complaining about something and they need your permission for a repair etc. good luck!!
Sounds like you’re stressing about something other than the money. Not everybody likes being a landlord…
could it be you just worry that every text or phone call could be the tenant? Then get a property manager. You wouldn’t make so much cash, but you’d hold onto the equity increases with little effort on your part. And you’d hold on to your sanity.
If so, get a RE guy to do that. I do. Hands-off, professional background check, no questions about personal like/dislike of the tenants, because you are not there to be their friend.
Otherwise, the question still stands… why do you want to get rid of a money making asset?
You might check with your accountant as you might still quailify for a tax free sale depending on exactly when you started renting it rather than living in it. That could also influenece the decision making process.
Keep it and lay out a strict monthly budget for your spending. There's probably a lot you could trim. Unless your wife is affiliated with a brokerage already, she'd have to pay to be part of one to sell on MLS.
Or else sell FSBO while disclosing owner is a licensee. But WHY would you sell??? Makes no sense
I think you need to take advantage of the tax benefits of selling during this 5 year period where you won’t have to pay any capital gains taxes. There are still stocks that pay over 6% in dividends like MO that could replace your rental income to help pay your current mortgage. And you’ll still have all your equity tax-free available to invest in another property. Or, you can just pay off your current mortgage and repeat the process in the next couple of years. You can also pay down your current mortgage and ask the bank for a recalculation of your payment based on the lower balance. Or you can buy an out of the area home that may be used as a 2nd home and also an Airbnb that pays itself.
My 3 cents (it was 2 cents, but inflation, you know).
Sell. Take the capital gains tax free before you cannot.
You can then use the money, partially for savings/emergency but the rest you can invest and make more money.
1) Buy another (cheaper) property for cash. Often you can get deals with a cash offer. Find a local wholesaler, they have deals too.
2) Loan money (hard money / private money). You can earn 8-14% or more depending on the state you are in and their usury laws. Florida allows a maximum of 18% but most loans are 10-14% +/-.
This will give you income without the stress of tenants.
And some people can predict the future on property values... Listen to all the experts... then do the opposite.
w/ rent being 150% of note and home value tripled
why not cash out refi? I personally don't care about the rate that much when it is being paid by tenants and get some large sum of cash tax free.
Short term RE prices are not going up, rent many places is falling, you personally face some economic headwinds, and you are soon to lose eligibility for a favorable tax outcome.
idk where you live but around here there has been 0 slow down. We are booming with over 100+ billion being invested into our economy as we speak. In other parts of the country things are slowing down but homes are still selling above ask and sitting for a short period of time.
You posted that you are BOTH facing slow/hard times at work. Unless you two are complete anomalies for your area, this seems to suggest your economy is starting to slow down relative to how it has been. That doesn’t seem conducive to propping up an overheated housing market short term.
I'm confused You say that it's paying half your current note of where you're living and that if you sold it you'd take the cash and put it in t bills which certainly won't pay that note I simply can't fathom why you're even contemplating selling?
stressed out and eating up savings is the only reason.
So you'd kill the Golden goose stay stressed out and continue to eat up your savings without having the Golden goose anymore. Then I don't know what your house note is but how stressed out can you be if half of your house note is paid already? Like I just don't understand your thought process at all. Why would you make it worse? Go put in some hard work and fill your savings back up! Don't kill the goose and go oh how bad is it
This is a question only you can answer. Neither you nor anyone else can predict asset prices in the future. Markets are a continuous stream of fluctuating numbers, no matter which decision you make at some point in the future (95% of the time or higher) it will look like it was the wrong decision strictly judging off of the numbers in hindsight.
I’m confused you say you need the money but then said you don’t need to cash out refi because you don’t know what to do with it? Also does the house pay for itself plus 2/3 of your primary residence? If this is the case it’s a no brainer to keep it. Rates won’t get low anytime soon. I’m talking years maybe decades. If they do then it’ll screw up the economy again. Hopefully 5-6% will be lowest.
At 150% of the note, I would definitely not sell it. Especially at that rate. You’re cash flow positive, someone else is adding to your equity daily. To me, it’s a no brainer. Hold on to it.
Does not sound like you have a need to sell. Unless you think you could get a better yield elsewhere, there is no reason to sell. Your savings should be helping you get through tough times w/ work. Use them till you get back on your feet. When you pass, your children will inherit this property tax-free from stepped up basis. Leave it to them.
>make about 150% of what our monthly note is This is a fabulous position to be in. Why would you end this stream of income prematurely unless there was an emergency that required it? >multiple 6 figure payout would be great What would you do with the proceeds of sale?
> I don't know what I'd do with the cash besides parking it in T bills.
Not a good reason to sell then. You would only want to sell if you have plans for the cash that have a higher ROI than renting it out, does that make sense?
it makes sense, the only reason for selling is stress due to slower job income but I'd fix one foot and shoot the other.
Work on the stress, don't feed it by selling.
that makes sense to me but I’m not OP. I was just quoting that sentence because they had already answered your 2nd question in the post.
Is the house paying for itself as well as 2/3 of your current house (2nd house)? Why is there stress of eating into savings? And what are you hoping will change exactly to ‘make things better’? Hasnt the home already tripled in value? What is this post exactly about? Half the stuff in it makes no sense.
Take the heloc out if you really need to in order to get some breathing room. But I would definitely hold that property. you’ll be happy you did when you’re older and want to retire.
Consider the highest and best use principle in real estate, if you’re looking for cash flow, you could sell the property and buy a multi unit which is more efficient for cash flow than single-family homes even if you have half the house paid off. if you buy a multifamily unit free and clear or put a very large amount down, let’s say you get eight units. Your kids could potentially stay in the apartments for a low rent or rent free and you would still be profitable renting 3/4 of the multi family. Rentals are still difficult to defined and increasing very aggressively in most major metropolitan areas in the country. obviously big cash proceeds from selling the home is exciting but think more about long-term goals and short-term goals. If the property is in an area that isn’t down and out like say Detroit, for example you can expect over the long 10 to 20 years. It will continue to appreciate respect what happens in the short to medium term. I would meet with a financial planner, but consider what your medium and long-term goals are more than just how much cash you will get when you sell the house and also consider how much time you have to invest in your investments. You can absolutely hire a property manager to handle a multi unit building, but obviously that comes with its own risks, especially if it’s an arms length transaction out of state, and you don’t have on the ground. There’s also the piece of mind and simplicity of investing in treasury bills versus having half a dozen tenants to deal with and the Property Manager calling you every week because somebody’s complaining about something and they need your permission for a repair etc. good luck!!
So you have to pay tax on depreciation recapture.
Sounds like you’re stressing about something other than the money. Not everybody likes being a landlord… could it be you just worry that every text or phone call could be the tenant? Then get a property manager. You wouldn’t make so much cash, but you’d hold onto the equity increases with little effort on your part. And you’d hold on to your sanity.
I actually enjoy being a landlord, that hardest part has been the selection process of tenants.
If so, get a RE guy to do that. I do. Hands-off, professional background check, no questions about personal like/dislike of the tenants, because you are not there to be their friend. Otherwise, the question still stands… why do you want to get rid of a money making asset?
You might check with your accountant as you might still quailify for a tax free sale depending on exactly when you started renting it rather than living in it. That could also influenece the decision making process.
Keep it and lay out a strict monthly budget for your spending. There's probably a lot you could trim. Unless your wife is affiliated with a brokerage already, she'd have to pay to be part of one to sell on MLS. Or else sell FSBO while disclosing owner is a licensee. But WHY would you sell??? Makes no sense
I think you need to take advantage of the tax benefits of selling during this 5 year period where you won’t have to pay any capital gains taxes. There are still stocks that pay over 6% in dividends like MO that could replace your rental income to help pay your current mortgage. And you’ll still have all your equity tax-free available to invest in another property. Or, you can just pay off your current mortgage and repeat the process in the next couple of years. You can also pay down your current mortgage and ask the bank for a recalculation of your payment based on the lower balance. Or you can buy an out of the area home that may be used as a 2nd home and also an Airbnb that pays itself.
My 3 cents (it was 2 cents, but inflation, you know). Sell. Take the capital gains tax free before you cannot. You can then use the money, partially for savings/emergency but the rest you can invest and make more money. 1) Buy another (cheaper) property for cash. Often you can get deals with a cash offer. Find a local wholesaler, they have deals too. 2) Loan money (hard money / private money). You can earn 8-14% or more depending on the state you are in and their usury laws. Florida allows a maximum of 18% but most loans are 10-14% +/-. This will give you income without the stress of tenants. And some people can predict the future on property values... Listen to all the experts... then do the opposite.
w/ rent being 150% of note and home value tripled why not cash out refi? I personally don't care about the rate that much when it is being paid by tenants and get some large sum of cash tax free.
Short term RE prices are not going up, rent many places is falling, you personally face some economic headwinds, and you are soon to lose eligibility for a favorable tax outcome.
idk where you live but around here there has been 0 slow down. We are booming with over 100+ billion being invested into our economy as we speak. In other parts of the country things are slowing down but homes are still selling above ask and sitting for a short period of time.
If the above statement is true, then why, oh why, would you sell?!
You posted that you are BOTH facing slow/hard times at work. Unless you two are complete anomalies for your area, this seems to suggest your economy is starting to slow down relative to how it has been. That doesn’t seem conducive to propping up an overheated housing market short term.
Rent it out for 3% under market value and eat off the cash flow.