Time to Sell Everything

6 Replies

Well, I have always thought I was a buy and hold guy but I came to the realization after speaking with some friends in finance, investing and banking that we are at peak levels. I contracted to sell a few things this week and I'm waiting to see what happens and sit on some cash. I will keep a few paid off properties but they will be limited. Anyone see what RBS suggested to its clients ? I agree cash out time is here.

Anyone agree? I see declines ahead and a coming perfect time to buy.

I'll keep what I have and if things go bad, use the opportunity to buy more just like we did last time.

@Thomas D. I would say it depends on what market you're in. Real Estate is all about location,location,location. My market is experiencing multiple bids when hot properties that are priced well hit the market. "Hot" means equity potential in a fixer or buy & hold OR move in ready and priced well.

Originally posted by @LaTashia Rose :

Thomas D. I would say it depends on what market you're in. Real Estate is all about location,location,location. My market is experiencing multiple bids when hot properties that are priced well hit the market. "Hot" means equity potential in a fixer or buy & hold OR move in ready and priced well.

Feels like 2007. Hot markets. Fast appreciation.Multiple Bids etc.....

Same old "sky is falling" scenario...things go up...things go down...people get in...people get out...people with timelines and resources long enough and large enough to ride the waves and stay put ordinarily very wealthy by doing so.  The enemy of the investor s not the boos and crashes..th enemy of the investor is making decisions based on emotions and then trying to time entry and exit to and out of a particular asset class.

The RBS article may be accurate...may be inaccurate...at the end of the day it is likely a bit of both.  My response when I read it was "Great, this too shall pass"...

If you sell you have to look at resale costs versus the gain and if you can replace that income with the same quality property or a different asset class at a lower point in the recovery cycle.

I have many clients from California as an example where cash flow is minimal but the property has increased greatly in value ( over double or more in the last few years ). They could hold the property but decide to 1031 instead. They put on the market and are selling for 4 to 5 caps. They are then exchanging into more passive investments in other states for a 7.5 to 8 cap.

Another way if someone didn't want to 1031 is to refi out up to 75% of their current property and then use those funds to invest some more.

If you straight sale versus 1031 or refi and hold you will get hit with capital gains, possible state taxes, excise tax, roughly 3.8% medicare tax, depreciation recapture etc. So you would stand to lose a lot of that equity gain using a regular sale.  

Some trends affect the entire nation and those are worth paying attention to, but I personally think an investor would be better and focusing their attention on the markets that they invest in. 

I live in California which is a "boom & bust" state so timing absolutely matters.  I personally track as much data as I can find on my local market.  

The big ones are...

Sales 

Inventory levels

Days on market

Notice of Default filing

Prices

But I also look at....

Domestic migration

Local unemployment

Large employers that are entering or exiting

These local factors will affect your local market.  In some cases local trends can be strong enough to overpower nationwide factors. 

Also, I prefer getting my hands on raw data if possible. Media writers often have bias or an agenda so their interpretation of the raw data can be inaccurate.   I would rather go straight to the source and make up my own mind.