My goal is to invest in a multifamily (4 doors or more) and this may be possible by selling my primary residence or HELOC. Which would you suggest/recommend? I bought my condo downtown Atlanta in 2013 (it was a foreclosure, 2b/2ba). The new Mercedes-Benz stadium (home of the Atlanta Falcons and Atlanta United soccer) opened a year ago, mix-use developments are being built everywhere, restaurants, etc. Needless to say my property value has tripled. Based on what I owe I could stand to make at least $200k if I sale but could rent it for 3x my mortgage or take out a HELOC and invest that way (?). I am attached to it and the Superbowl is being hosted here next year so I would like to have it for that experience but why defer obtaining my goal of acquiring a multifamily (or even apartment complex >16 doors). FYI - I use to Airbnb the guest bedroom until my HOA cracked down on that. I do have another place to stay if I do choose to sell. And I also have other rental properties but they are SF. The RE that sold me the place is begging for me to sale and I am actively looking at investment opportunities in case something lines up. Thanks in advance for your feedback.
Certainly a lot of options, which is isn't a bad thing. I just rented out my SFR and bought a new home. One thing I wish I'd done was get a heloc on it first as owner occ, then rent it out(my value has doubled since purchasing & rents for $1,600, PITI is $742). When I listed it for rent I had a lot of other agents calling me trying to list it.. My response was a simple question back to them: "would you take $150K today if you didn't need it.. Or hold for another 25 years & make well over half a million in a tax advantages position?" That generally ended their sales pitch fairly quickly. 😉 Again, the only thing I wish I'd made more of a priority was accessing that equity while in an easier position to do so from a banks perspective.
@Sharon Deloris Hi. Don't sell! The value should continue to rise as development in the area continues. Message me if you want to chat.
Hi Sharon. I agree with Steve. Based on the numbers, you seem to get the best of both worlds in being able to rent & generate substantial cashflow, while also being able to tap into your condo's equity. Given your goals in getting into multifamily, it may be worth considering the opportunity cost of selling now & potentially losing out on any additional appreciation or whether you'd be able to find anything in the multi space anytime soon. If not, you'd just end up sitting on a bunch of cash.
@Sharon Deloris, I think the question on whether to sell comes down to what you think are the valuation prospects going forward and also what is the durability of this premium rental rate you can get?
If you feel that the bulk of the spike in value has already happened and that all of the development going on with eventually cause rental rates to soften, then selling would be the thing to do. Find the next hot thing before it gets hot!
If you are confident that valuations will remain strong and that the rental rates will be both durable (readily able to find a good tenant) and at a premium rental rate, then I could see why you would want to hold onto that.
I am meeting with my realtor this week to go over some numbers/projections as well. Last year, there were alot of ground-breaking ceremonies (1: mix use development, 2- hardrock cafe with lofts, and 3- a park) happening in the neighborhood and that's when we saw our prop values jump almost 50%. and about 30% spike from last year. It might be an opportunity to get in on one of those investments as someone eluded to.
Thanks again all!
Hi Sharon, you are in a great position. With all that is going on and will continue to develop in the area, I would say "leverage" is your friend right now.
Don't sell it right now. Rent it for a premium and draw the cash flow. I would even do 6 or 12 month rentals to give yourself room to reevaluated the market and increase the rent.
I would then draw on the HELOC which your tenant will cover from your premium rent.
I would use the HELOC as leverage as a down payment to a large multi-unit. Now you have multiple streams of income and your condo appreciating while the tenant pays and the area develops.
But don't sell, you will do yourself a disservice!