What's my best move????

Question

I am 28 years old and have flipped houses for a few years and finally have one paid off completely and I rent it for $650 a month. I originally was going to live in it but then got offered a job out of state. Right now I gross around 90,000 a year income at my job plus the rental and the only debt I have is a truck paymet 540 per month (36k total loan). All other bills per month total $1600 rent, electric water etc. For a total of around $2150 a month.

My question is should I continue renting out my house I own or should I sell it and reinvest that money elsewhere???

I also deposit money into a 401k and a Roth IRA each month (totaling about 15%)

I just feel like I could be doing more or something else that could greatly benefit myself. does anyone have any advice?

Andrew Kerr · Answer

@Josh Daniels welcome to BP!

I am sure you will get a wide range of opinions, as a lot of this can vary based on personal preference. So here are my two cents:

I would make out the 401k through work. Then also max out a ROTH IRA.

Then any extra money you have save for investing in real estate further.

Then for your current property, I would get a loan against it. I would be conservative and get a 60-70% LTV. Then put property management in place and keep it as a rental.

Then take the cash you pulled out from the property and use it as a down payment on a house hack. Look at buying a small multifamily in your new area. Live in one unit and rent the other unit(s).

Khalin Dendy · Answer

Hi Josh,

I live in Bismarck currently and have lived in North Dakota for most of my life.  I have been in rental real estate for just the past few years, with properties not in western ND.  You are correct the oil boom has caused significant increases in property costs here.  Although I am sure there are exceptions, I have not been able to find properties in western North Dakota to cash flow well at current prices.  Using the equity out of your current rental to purchase another property sounds good, but I would try to find something away from western ND or possibly in TN where you are more familiar with the market.

Khalin

Lee Gierszewski · Answer

@Josh Daniels Welcome to BP!

I'd also advise not to try and find a rental out in western ND. Williston, Minot, and Dickinson are all pretty rough from what I've heard/seen. Bismarck is a possibility (more economic diversity) if you'd like to get a rental somewhat close to where you're working. I have a few here and have been able to make some decent cash flow. If you'd like to maybe look at a few around Bismarck, I am an agent and could show you a few if you'd like.

Kerry Baird · Answer

We bought some houses in West Texas before one of the oil booms.  We thought we were buying in a lateral market, so that was unexpected. The house prices doubled, which was great.  We didn’t sell.  Rents moved upwards.

When the bust came, as happens in rolling markets, the house prices came down, as expected.  What we didn’t expect is that the oil patch workers would lose their jobs, which meant tenants couldn’t pay.  We had a protracted season of late and no-pays on our rentals, instead of a gradual dropping of rents.

That was (and is) a factor that catches investors out in any rolling market.  I am much better when I earn my money in a high growth area/job, and invest it in a consistently growing area, a predictable lateral moving and well diversified economy.

Josh Daniels · Answer

Thanks for the information, I appreciate the input. I own the rental in East TN where the cost of living is low. That's why it goes for 650 a month And the appraisal of the house is 82k. I currently live in North Dakota in the oil fields where houses are extremely expensive. My home in TN would sell for 200k here. I'm afraid to invest in ND because of the oil booms. I think someone could really loose up here potentially. I plan on moving back to TN in the following years just not sure how many.

What's my best move????

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