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Updated over 11 years ago on . Most recent reply

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Jonathan M.
  • Investor
  • Los Angeles, CA
16
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71
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Selling primary residence to fund real estate investing?

Jonathan M.
  • Investor
  • Los Angeles, CA
Posted

Has anyone done this or considered doing this?

I currently live in a condo, have been living in it since 2001. I've already put quite a bit of money into it, as it was a fixer upper and still needs thousands of dollars of additional repairs. Renting it out is not an option since it's not in rentable condition and even if it was I'd lose around $200 a month at least.

I've thought about selling and renting for a few reasons:

1. I work 47 miles from where I live, I'd like to kill my commute within reason.

2. I don't want to pour more money into my condo when the value won't increase that much.

3. I can live closer to work

The downsides:

1. I'd lose 6% of the sale price to real estate commissions

2. I'd have to pay sellers closing costs I'd assume

3. I work in west LA/Santa Monica area and rent around there is ridiculously expensive, which will make finding something affordable a challenge

4. Moving is expensive

I do have equity so I want to free up cash to invest. I don't own any rental properties yet and I only have a minimal amount of cash to invest at this point. I'd sell, rent an apartment closer to work and go and look for a buy and hold investment.

Most Popular Reply

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Ali Boone
  • Real Estate Coach
  • Venice Beach, CA
3,173
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Ali Boone
  • Real Estate Coach
  • Venice Beach, CA
Replied

You drive from the OC to WLA/SM every day?? Phew. No wonder you want to move closer. For anyone not familiar with LA traffic, 47 miles here means something wayyy different than 47 miles anywhere else! :)

No but seriously, it's a conundrum. My first gut feeling is to tell you to move. Don't underestimate the value of sanity in all of this. As for 6% agent fees, that is a small price to pay for happiness, especially if it still means you are profiting from the sale. Who cares about that 6% then? You'll have to pay it now or some other time down the road. Closing fees, you don't have to pay those by any means. Even if you did, you can make those and that 6% interest back with an investment property really easy, between the actual cash flow and the tax benefits. And add gas savings into the mix too. I used to commute from West LA to Palmdale every day and I'll never forget the month that my gas payment was more than my rent!

Rent out here is atrocious, but it can't be too terribly worse than in the OC. West LA especially has some cool places. It's once you hit right near the beach everything shoots up really bad (says my studio with no kitchen).

Yep, I've convinced myself by talking it out that I think you should do the move. Moving doesn't have to be too expensive either. Just buy a bunch of friends a couple cases of beer and you're good to go.

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