What should I do? Sell or continue to own a cash flow condo?

Buying & Selling Real Estate Discussion 38 Replies

Great thread, I have the same dilemma but in Fort Lauderdale. Was considering selling my place to invest in a multifamily in the future (12 months of less). Purchased for $200k 6 years ago with 100k in equity now. Could cash flow $500/month if I rented it but I feel that would change my goal of investing in a multi family. Lots to consider thanks to your posts. Any feedback is appreciated. 

Originally posted by @Khalil Bachir :

Great thread, I have the same dilemma but in Fort Lauderdale. Was considering selling my place to invest in a multifamily in the future (12 months of less). Purchased for $200k 6 years ago with 100k in equity now. Could cash flow $500/month if I rented it but I feel that would change my goal of investing in a multi family. Lots to consider thanks to your posts. Any feedback is appreciated. 

Khalil, I live down here in Fort Lauderdale (condo) and am looking for a SFH. I will send you a private message, perhaps when you are ready to sell I can make you an offer given the property meets my criteria.

House hacking multifamilies (duplex-quadplex) is a very good strategy, I wish you the best of luck! 

Check out one of the recent BP youtube videos  with Michael Swan.

He bought condo's in Cali, made huge appreciation  gains and then sold them. He took his money and did a 1031 exchange into apartments in the midwest. 

He grew his portfolio tremendously from this. Maybe shoot him a PM?

Good luck!

Ryan

Hey Austin, Thanks for reaching out. Ill be sure to get in contact with you. 

Khalil

thanks ryan, that seems to be the goal. I think selling is the way to go. Thanks again. 

Khalil

I think you need to decide whether you want to be a cash-flow or appreciation investor. The former means selling and buying cheaper properties in the mid-west or south. The latter means staying in CA. The debate has been made in thread after thread. Since you are fairly new to this you haven't made up your mind. One isn't right or wrong. It depends on your goals, risk tolerance, and your own predictions about the future of the market. 

The notion that every dollar you of your net worth must be earning you at least 10% (or else you are leaving money on the table) is an aggressive strategy. Having a high amount of equity in a property (relative to its cash flow) is a conservative strategy. Some want to only invest in their backyard, even if there are lower returns. Others are comfortable investing out of state if the returns are better. You need to decide what is right for you.

Paul thank you. I agree that hanging on to equity is conservative which is why I am even more convinced now than before to sell (1031). From my limited knowledge and research, Ive been lead to believe that as a beginner it is wiser to invest in your back yard. What are your thoughts as I am aware of your out of state investments. Thanks.

@Khalil Bachir

The reason I am comfortable investing out of state is because I am only passively investing in syndications, which means I have no role in the operations anyway. The important thing is that the people in charge are qualified people that I trust, and they have their own money invested in the deal too. There are many on this site who have invested in their own properties out of state (as opposed to syndications). Some have horror stories, and others have had success. The important thing is to make sure you have a good team working locally, and be ready to replace anyone who is not performing. 

Oh, I own one property myself that is out of state, but in that case I have a family member who also owns rentals who looks after it for me. I prefer not to buy any more because I would rather not manage from afar, and there aren't great opportunities in that market either. 

Thanks for the input Paul. I will stick to my own back yard as originally planned. Ive read about those horror stories and am not interested in joining that club. If you have reliable contacts in the South Florida area please send them my way.

The group that I invest with follows a model that does not work well in South Florida. However, Orlando, Tampa and Jacksonville are all fair game.

@Ryan Budil I second your advice. You can technically turn a condo into an apartment complex if you allow yourself to consider other markets. On that note I highly recommend reading the book Multifamily Millions by David Lindahl, before doing anything.

I would sell.

1. Appreciation is speculation, that $270k equity is DEAD unless you sell it and cash out. You could use the $270k to reinvest.

2. $400 cashflow on a $500k property?? Way too low.

3. Not a fan of condo, I personally will never buy a condo, don't like the idea that my property is controlled by HOA.