Hold or Flip?

4 Replies

I am sure this site is full of answers regarding this question, but I need a little advice.

I just picked up my fourth investment property.  Once repairs are complete, I will have 50-65K equity.  I am quite excited about that.

I now have four mortgages, including my private home, totaling $315,000.  On a good day, all of my properties, including my private home, are worth about $600,000.

I am considering selling one of my primary home.  The problem is, I will lose one home just for the sake of having a home paid off.

I am losing thousands of dollars each year to interest payments. Not too sure when to say enough debt is enough and stop buying homes. :)

@Shaun Hunt  Can you clarify?  Debt is okay as long as it is making you money and not causing hair loss. 

I agree with @Cal C. What's the rate of return on your investment properties, Shaun?  If you're making... 8% on your investment and your loans are costing 4% then don't pay-off your debt.  Keep replicating (borrow low, invest high) as much as you can. 

To Clarify:

Duplex, both sides Owned about three years. I owe $73,000, get $1600 in rent, pay about $600 in mortgage, WSG Duplex is worth about $160K

SFH #1 Owned about two years. I owe $53,000, get $850 in rent and pay about $500 in mortgage, WSG Home is worth about $140K

SFH#2 Acquired 11/19/14 (Yesterday), so I want to avoid short term hold tax if any. Paid 98K owe 79K, monthly payments $620, tenants move in on Friday at $1,100/month. Home could be worth $150-165K

My home: worth $140ish 1st mortgage I owe $73K, just took a HELOC to purchase last property, I owe $30 on that.

To me that doesn't seem like much cash flow.  However, since you have so much equity, either there are some great deals there and/or there has been some serious price appreciation since you bought.  

If it was me, depending on the tax situation, I'd probably flip this house, especially if I could find other similar deals.  Then I'd rinse and repeat.  Yes, you are going to pay a lot more in taxes, but you are going to be making more money that way.  Pretty soon you could be buying rental properties off the cash you make flipping.  

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