Real Estate Investor · Pembroke Pines, FL · Member since 2017 · 80 posts · 34 votes
Here is the real estate scenario....what do you think?
In 2017, I bought a 4 bdrm rental home in Port St Lucie, FL for $140k. My tenant pays $1500/mth and I make $250 a month profit. The tenant has been amazing, even fixed 2-3 broken items herself. The lease is up now and she wants to renew. I could increase rent another $50/mth, or I could sell the home for $200k and make a handsome profit of $60-70k. I can take that an invest in my first multi-plex or maybe two more homes. Should I do it even though my tenant has been the most amazing, ideal tenant I have ever had? Or do I renew the lease and keep making $250-300/mth in profit. What do you think?
Harper Woods, MI · Member since 2017 · 384 posts · 311 votes
7y
@Shelby Mathew
I would renew the lease and look to getting a heloc on that rental to use for that multiplex now you would an additional 2-4 doors. If you save that cash flow and also provides some cushion for future deals .
Real Estate Investor · Pembroke Pines, FL · Member since 2017 · 80 posts · 34 votes
7y
Thanks for the feedback. My understanding was that a HELOC would only go to 80% LTV which would give me maybe $30k credit vs twice that if I sold. But I would like to consider that if somehow a good option.
Realtor · Gilbert, AZ · Member since 2019 · 2 posts · 0 votes
7y
Hi Shelby, it really depends how long term you want your investments. The market is at a high right now, so it is a great time to sell, and put that cash into another investment, or wait until the market turns again to purchase low. The other part of it, is keeping a long term renter and paying the house off which by that time, the home will have definitely appreciated in value while a renter paid off that debt for you. The other thing to think of, is when selling, you always have fees. You will have to pay realtor fees, possible closing costs (depending on negotiations) and then possible capital gains taxes, unless you roll it into another investment product within 90 days. Lots to think about, but it really depends on what your long term and short term goals are.
As others said, the profit that you get may be less than you think after taxes, realtors and lawyers' fees. That $60-70K is probably closer to $30-35K.
You don't mention how much you'd net every month on the new homes? Housing prices have increases, based on what you wrote, so your mortgage payments would be higher and eat into some of you profit. Run the numbers for a mortgage on your current place as if you bought it for $200K with a mortgage.
Real Estate Investor · Pembroke Pines, FL · Member since 2017 · 80 posts · 34 votes
7y
Thanks all for your guidance. Nice to know people will share helping information on here. So, I'm not sure which way I'll go yet but at least this was helpful.
Real Estate Investor · Pembroke Pines, FL · Member since 2017 · 80 posts · 34 votes
6y
Just an update....my bottom line profit after all ending up being $58k which is awesome (technically $74k but I'm guessing I did about $12-15k in updates)...found another single famly valued at $250-260k that bank approved my $176k offer, which needs $10k in work. Unbelievable deal, but most likey they wanted year end deals since they approved on 12/24/19 and no one else offering from my understanding. Glad I found this as I was on my 40 days to identify a property for my 1031 exchange. Whew. Thank you all for your advice.