Hello Biggerpockets Pockets. I want to find out a play that is realistic for growing my buy and hold goals for financial freedom. I live in Phoenix, appreciation has been great during this time and my 4plex has gained about 150k in equity and may continue during the next 3-5yrs depending. Im wondering if i should wait things out and sell at the height of the market, use that money to buy other investments properties when the correction comes (it's also my primary residence so i can keep all my capital gains) OR Should i simply use a "open HELOC" get properties now while this appreciation is rising, primarily in the south east where you can buy multiple properties for a lower cost? OR Whatever else seasoned investors suggest is the best option.
@Larry Fullard Hold on to that 4-plex forever. Phoenix is growing like a weed. You're NOT going to time the market like you think you can. The experienced investors don't time anything; they strategically sell properties when the equity far out ways the rental income. They sell properties with issues and buy others with less headaches and appreciation potential. If you're a buy and hold investor think long term and take things slow.
I'd utilize HELOC. Don't sell that is a hot market
@Jaron Walling thanks for the insight really appreciate it.
@Caleb Brown Another friend of mine who invests in real estate said the exact same thing so glad to hear it’s mutual. I’ll look into this option for sure. Thanks
If it's doing well for you, then keep it. You can always leverage a HELOC or equity loan depending on your needs and risk appetite on the purchase side.
Keep in mind if and when you do eventually sell I believe you only get to exclude 25% of the gain due to one unit being your primary residence (25% primary, 75% investment).
@Jaron Walling To piggy back on what you said, how do you determine how much equity outweighs the cash flow from holding? Is there a percentage people use in RE?
@Larry Fullard My wife and I were faced with the Sell/Keep dilemma, and we decided that keeping our rental, with access to equity was the both of both worlds. We ReFi'd into a specialized 1st position Heloc on our property, known as an "offset mortgage" in other countries. It's a line of credit tied to a zero balance sweep checking account, every deposit lowers the balance and thus saves interest cost. So we can park idle funds/deposits on our line, where they work much harder than savings, tax-free. We have access to our equity for 30 years, so it maximizes flexibility.
We're able to enjoy our monthly cashflow, see appreciation, and are ready for the next opportunity when the market turns.