I’m very new here and have really enjoyed reading the posts and advice. I’ve been a buy and hold investor for a dozen years and I can’t believe how much I’ve learned from this site in a few short days!
I currently own 4 rental properties (and 1 flip I’m trying to complete...but that’s for another post). I have accumulated these properties over the past 11 years or so. They all have good positive cash flow. Two properties have doubled in value and two have more than tripled in value. I’ve been able to pay off 2 of the properties and the other 2 have very small balances remaining.
Because of these investments I’ve been setting goals and have had an amazing plan set up to retire early from teaching kindergarten (next year) so I could enjoy traveling and to spend more time with my husband. I also always wanted to start flipping houses after retirement.
THEN suddenly everything in my life changed when my husband died unexpectedly. So...my financial income has also changed significantly too. I’m still retiring from teaching...that decision I’ve already made. But now I need to make sure I’m making my investments and money work even harder for me!
Should I start selling my rental properties soon since I know it will give me a nice guaranteed cushion in the bank now? I’m concerned that if the values fall I will have missed an opportunity to cash in. Or should I sit on them since they’re all giving me income which will probably continue to increase?
You should get yourself educated quickly before you do anything hasty such as selling your rentals. The property you own is always easier to obtain than the property you don't own...
Learn about the BRRRR strategy first off. There is a book about it right here:
After that, you also should go to some local real estate investor meetups. Check the Bigger Pockets events section as well as meetup.com.
If I had the situation you do now, I would probably refi all of the properties to pull as much equity out as I could while still maintaining a cashflow with a safe margin. I'd use all of that money to go seed the purchase of more properties and do BRRRR deals as long as they made sense. Ultimately, I might lever up into some triple net commercial rental properties such as a strip mall or office park.
@Geordy Rostad thank you for taking the time to read and respond. I just purchased the book you recommended and look forward to reading it!
I have no doubt BRRRR works, and I've done all but the refinancing. My biggest concern is losing so much positive cash flow by adding mortgages. But I know on the other hand I'd have the cash to invest. It's definitely something I hadn't considered before so I need to spend some time crunching numbers to see what works for my situation.
Again, thank you! You’ve given me a lot to think (and read) about!
@Shari Nott mcKinley sorry to hear about your loss. You've done very well on your own! If you have time, I'd love to hear about how you acquired the properties and your analysis of how to know if a property cash flows. (Either here or PM). We currently have a rental we built that we had to rent due to job relocation in SoCal. We are looking for an exit strategy. It's 5 bedroom 4 bath in gated community with pool. It's hard to know what to do! So I understand. I think it's a great question. When you've been successful - what to do with your money? I would be nervous about refinancing too because that is not really getting your money out -- it's taking on more debt.
I think you need to contact someone who specializes in this -- a financial planner or an estate planner. Estate planners are often also Real Estate Attorneys. Especially if you're focused on retirement. if you need the cash for retirement then you should sell. I would not do anything rash and just think about it. Last but not least, it's very, very hard to find a good realtor in California. There are several highly successful people on BP who could help you - who have knowledge.
I do know of some investment groups (not REI Clubs) that offer opportunities to investors like yourself and it's required that you have a certain level of assets. Like you have to be in the $1,000,000 range and then you get opportunities for other investments.
Last but not least, hold onto what is valuable to you -- there are a lot of avenues in real estate where people will happily take your money. Don't do it. You don't need to be sold stuff at an REI Club etc. KEEP YOUR MONEY, YOU EARNED IT!!!
@Shari Nott mcKinley I'm so sorry to hear about the loss of your husband and hope you are ok. Dave Ramsey's advice is usually out of step with this audience but may apply here - Avoid doing anything rash the first 12 months. Allow yourself a chance to heal and see where life is headed. Then make your decisions with a clear head. I wish you the best, Terrell
So sorry for your loss.
Since they cash flow very well and there is great value in them, I would tend to use the leverage if necessary to acquire more of them. The advantage of rental property it will keep paying you back forever. Might think about other strategies since you have experience; using other peoples money to acquire additional properties ( private lenders). If you enjoy flipping then keep flipping.
Look at what you enjoy and that is the route to take. Take your time to make a decision.
@Shari Nott mcKinley I'm sorry to hear about your husband. First thing I would suggest is not to make any big financial decisions for 6 months that weren't already planned for. Take that time to look at your finances. Will you get a pension from your work? If so, how much? How much money do you need to support the lifestyle that you want?
I've been thinking ahead to retirement and what to do with my rental properties. One option is to keep them all and use the rent to supplement my pension. The other option is to sell them slowly one at a time over 10-15 years. In my case most of the rentals are currently worth $300-400K, so even after taxes, that would give me a lot of money to live off of. I don't know how much yours are worth. If my net profit after expenses is $600/month, over 10 years, that is $72K. In my case, I'd be better off selling them and pocketing the sales price.
So sorry for your loss. Before you make any decisions take time to review what these properties do for your financial situation if you keep as rentals in current state, refinancing them, selling them or selling for a replacement property. All may have different financial outcomes as well as time commitments. I’m near by in the west side of LA and spent many years in Redlands. I’d be happy to share what I know about how the different decisions could affect your financial situation. Send me a private message if you’d like to talk.
Would cash out refi be an option with better tax advantages when you retire?
The market goes up then it goes down,its probably a decision you ll have to make ,personally I like the fact I`m getting a check every month.
Often times when someone is grieving they feel like they need to do something, to take some sort of action. If you can handle it financially, don't sell the properties and don't make any big financial decisions for 6 months to a year. If real estate prices drop, they will likely recover if you hold on long enough.
Once some time has passed you should take some time to figure out what your plan is. There's no right or wrong answer to whether selling the properties makes the most sense. Find a mentor or someone you trust to walk through things with you and help you make good long term decisions.
I'm so sorry for your loss. Post any questions you have or reach out if you have questions on anything.