Sell or keep the (seemingly) golden egg chicken?

[BellaPippin]

Well FUDGE,

My equity went through the roof in these two years (I'm kinda only going by the Redfin estimates but wouldn't mind an official appraisal)

I'm finally turning in revenue (got paying tenants, cash flow, got a property manager~). I can't refinance because rates are stupid and bc I've got crippling debt (long story and yes, my bad at the end of the day). Do I sell and clean the slate? It's not like I have any other investment ideas. Everyone keeps crying 2008 wolf coming, though. Aaaaahhhh...

Also hi, I'm alive and well.

 

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[Guest-5ty5s4]

Hey you're alive! I think what you're doing is so exciting. Remember your progress thread from 2 years ago.

If you sell, would the proceeds be enough to go out and buy (2) of what you have now? That would be worth it! Maybe you could refi out instead too? I know rates are up, but that doesn't preclude borrowing from being a good decision. It's just math. (Of course debt is always dangerous). #NotFinancialAdvice

 

[BellaPippin]

If you sell, would the proceeds be enough to go out and buy (2) of what you have now?

That is an excellent point! I always strike gold with you guys. I need an appraisal stat.

I'm a bit stuck RE: refinancing out because of my debt to income ratio (That would have been the plan, so I could "BRRR" but life got in the way). Currently hustling to get that debt down. And ALSO because my current mortgage is pandemic percent at 2.23% it feels so bad to jump to 6%!

 

[Guest-5ty5s4]

That is an excellent point! I always strike gold with you guys. I need an appraisal stat.

I'm a bit stuck RE: refinancing out because of my debt to income ratio (That would have been the plan, so I could "BRRR" but life got in the way). Currently hustling to get that debt down. And ALSO because my current mortgage is pandemic percent at 2.23% it feels so bad to jump to 6%!

Totally relatable. Same boat with interest rates. Curious what others say like @Antifragile and @SteveO

 

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[Antifragile]

What is the downside of doing nothing?

Seems you are cash flowing, have cheap debt at the moment... what's the question?

 

[biophase]

That is an excellent point! I always strike gold with you guys. I need an appraisal stat.

I'm a bit stuck RE: refinancing out because of my debt to income ratio (That would have been the plan, so I could "BRRR" but life got in the way). Currently hustling to get that debt down. And ALSO because my current mortgage is pandemic percent at 2.23% it feels so bad to jump to 6%!

Sounds like it's a multifamily. Unfortunately, anyone looking at purchasing it would be running the numbers with a high interest rate loan, which would push your valuation down.

If you sell, what to you end up with after taxes?

How come you weren't thinking about selling earlier this year compared to now? What changed your mind?

 

[SteveO]

I'm with @Antifragile. Hang tight!

Very proud of you. This business is filled with challenges. You worked your way through some massive issues already.

 

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[BellaPippin]

Sounds like it's a multifamily. Unfortunately, anyone looking at purchasing it would be running the numbers with a high interest rate loan, which would push your valuation down.

If you sell, what to you end up with after taxes?

How come you weren't thinking about selling earlier this year compared to now? What changed your mind?

Yes it's a duplex!

Good question. I was stuck with non-paying tenants for the whole pandemic, and only started cash flowing this May....I did think about it, but I keep telling myself I bought it for the passive income and not to flip. I guess my debt makes me anxious... this is a good reminder. The property is finally cash flow positive, great location, rents keep going up, and if im lucky the better part of the neighborhood is coming my way instead of away.

 

[BellaPippin]

What is the downside of doing nothing?

Seems you are cash flowing, have cheap debt at the moment... what's the question?

I guess I should rename my thread to "how to stop worrying about the debt on my back" xD. I mean... it bothers me because with no income, it cripples me to get any more leverage (I'm currently just taking care of the house and hustling). But gotta remind myself why I bought the building in the first place. Thank you.

 

[BellaPippin]

I'm with @Antifragile. Hang tight!

Very proud of you. This business is filled with challenges. You worked your way through some massive issues already.

Thank you @SteveO! FINALLY it's looking up! I got another stick on the wheel as soon as I scored the new tenants with the escrow going up, cutting my revenue more than half... But I finally have a property manager and the little $$ just comes in every month! <3

 

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[SteveO]

Yes it's a duplex!

Good question. I was stuck with non-paying tenants for the whole pandemic, and only started cash flowing this May....I did think about it, but I keep telling myself I bought it for the passive income and not to flip. I guess my debt makes me anxious... this is a good reminder. The property is finally cash flow positive, great location, rents keep going up, and if im lucky the better part of the neighborhood is coming my way instead of away.

Nothing wrong with passive income. But, regardless of the thought on the street, there usually isn't much in the small unit size.

The recent increases in rents will help.

I went for cashflow early on but found that capital improvements would constantly wipe that out. Capital improvements are vital if you want to keep the property in good shape.

Strategic buying and selling will allow you to gather enough units to make the cashflow matter.

A 100 unit property would be a good size. Especially if it is paid off.

Sell the duplex if you have a good increase in equity and parlay that into 10 units. Later, sell the 10 and roll into 50 or so. Keep repeating until goal is reached...

Read the book "how to buy and sell apartment buildings" by Vollucci. Great examples in there.

A great endgame would a commercial commercial "NNN" property. The tenants pay all expenses including capital improvements.

 

[BellaPippin]

Nothing wrong with passive income. But, regardless of the thought on the street, there usually isn't much in the small unit size.

The recent increases in rents will help.

I went for cashflow early on but found that capital improvements would constantly wipe that out. Capital improvements are vital if you want to keep the property in good shape.

Strategic buying and selling will allow you to gather enough units to make the cashflow matter.

A 100 unit property would be a good size. Especially if it is paid off.

Sell the duplex if you have a good increase in equity and parlay that into 10 units. Later, seek the 10 and roll into 50 or so. Keep repeating until goal is reached...

Read the book "how to buy and sell apartment buildings" by Vollucci. Great examples in there.

A great endgame would a commercial commercial "NNN" property. The tenants pay all expenses including capital improvements.

Thank you! I still have that book since you first recommended it to me. I will re-read it.

 

[Johnny boy]

door number 3: grow a profitable business so these questions are trivial

 

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[BellaPippin]

door number 3: grow a profitable business so these questions are trivial

That’s an ongoing work in progress!

 

[Antifragile]

That’s an ongoing work in progress!

You’ve got this! RE is an amazing business for Fastlane.

Reach out anytime with questions.