Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
Wondering how many of you out there are selling into the recent real estate run up in prices. Not all markets are the same but some including LV, PHX, SF, LA have seen 100% plus gains in certain asset types. I know many people that started investing in 2009 and built large portfolios of homes purchased at bargain basement prices. Now that those homes have significantly appreciated many are beginning to sell out although everyone I know is holding and continuing to buy.
Please share your strategy to "cash out" and where your planning on parking that money. Or if you plan to hold the course, why do you think that is prudent?
Investor · Durango, CO · Member since 2008 · 163 posts · 59 votes
13y
In most areas where we have property, we haven't recovered our losses yet. In the one city that has gained 23% in the last year, where we bought at the bottom of the market, we are pleased to see the gains, but certainly not ready to jump and run. We believe the prices will continue to climb for a while, so we'll keep a watch on them.
When we do sell them, I hope to buy a larger multi-family.
Good point. Most investors seem to feel there is still a lot of room for appreciation. Don't hear much opinion that markets will correct. Makes me wonder ...
I think the markets Are correcting. IMHO, the markets were too high, then fell too low, and will come back to some point a little lower than they were at their high point...maybe 80% of that or so...just my guess. And then, economy willing, climb at a normal rate from there.
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
13y
I agree. So the question each market should access is where are you in that cycle. Some have not reached back to 80% of peak and others like SF are back to near peak. I'd say PHX is at about 70-80% of peak prices. The other important dynamic here is population growth and new building. PHX simply does not have the supply to meet the monthly growth in population so many think we will surpass peak prices by next year. Once new housing meets demand then a new floor will be met and slow growth from there. As long as we don't overbuild again and if money continues to be easy ....
Investor · Durango, CO · Member since 2008 · 163 posts · 59 votes
13y
Do you have rental property in the Phoenix area? I do, and I don't see my properties at 80% of peak...more like 50%. And I base that value on an estimate a realtor gave me just a day or two ago. Maybe yours are in faster climbing area.
San Francisco, CA · Member since 2013 · 13 posts · 1 vote
13y
Serge,
The major issue that I see with cashing out is exactly what you've pointed out in your post - with investment yields as low as they are across asset classes (money market accounts, bonds, you name it) where will you park the money if you cash out? Real estate might still be the least-worst thing to be invested in right now.
There's also the very real possibility of higher inflation - the Federal Reserve is actively targeting higher inflation so as to make the huge amount of both government debt and household debt out there more manageable. This is a good thing for the economy, but it hurts savers, and particularly those who are holding so-called nominal assets like cash.
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
13y
I do invest in PHX. There are different perspectives on the market here. In the sub $100 segment we are close to 80%. Homes that sold at peak for $200k could have been had for $60-100k 2009-2011. Right now they are comping at $150k-180k. If you look at median across PHX we are at $185k median and it was $225k for a while. Regardless of where we are the appreciation has been very real.
Real Estate Investor · Bristol, TN · Member since 2010 · 59 posts · 31 votes
13y
I'm one of those who has been acquiring a lot since 2009. I'm selling as much as I can to build cash. One thing I've learned in this business is that cash is king. The more you have, the easier it is to get and use other people's money. So, my strategy is to build cash and use opm going forward. If you've got cash in your pocket, you can make money in any market cycle. Where will I park it? In a liquid account so I can use it for transitional funding and take as much stress out of my life as possible.
Investor · Portland, OR · Member since 2012 · 266 posts · 128 votes
13y
Two things:
For me, REI is a long-term investment. So, if the market spikes or craters, I hope to have the disciple to rely on dollar cost averaging to meet my long-term goals.
I think real estate is well poised for growth over the next 4-8 years. I doubt we will see increases like we have in the last 12 months, but I do expect good prolonged returns.
With that said, the recent increase certainly is a good time to exit or liquidate if you've been looking for these opportunities.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
13y
Still buying for me, I picked up another house and a 4 unit property in the last week. I am getting ready to sell one of my rentals this month after a light rehab because I can make a good profit with the prices being up and unload one that's become too far to deal with. When I bought it I had fewer than 10 rentals, now I have more than 40 so it makes one that's 30 minutes away from any of the other rentals a pain to deal with. If you need to get rid of something it's a good opportunity, but I'm in it for the long haul so I'll keep buying as long as the numbers work.
Real Estate Investor · New York, NY · Member since 2012 · 210 posts · 15 votes
13y
(1) I have 2 marginal properties I have considered selling. But transaction cost and ability to reinvest capital is problematic, so I will hold for 14 months and re-evaluate from there.
(2) I am nervous about interest rates. Rates going from 4% to 7% would impact home prices 30%. I would rather buy an asset at 70 cents vs. 100 cents. But I am also in this for long-haul (30+ years) and thus should not be trying to "time" home prices to begin with. Its a conundrum I struggle to think about.
Specialist · Kirkland, WA · Member since 2013 · 1k+ posts · 817 votes
13y
I'm cashing out of LV right now. I've realized my gains in residential and am looking to move into MFH which is 6-12months behind SFH. It depends on your goals. I needed to release some capital to continue to grow, and I realized I could move into large properties more quickly by completely cashing out rather than stitching together a bunch of smaller properties.
Rental Property Investor · Scottsdale, AZ · Member since 2010 · 390 posts · 599 votes
13y
I too am considering selling off some holdings. Problem like everyone mentions is where to move the money. I have loans at 5-7% for 30 year fixed so te thought is to sell enough property to pay down all the debt and then sit on the minimal amount of properties with no debt with cash flow that will provide for all living expenses. This was the goal all along so maybe now is the time.
I'm struggling finding property that can return 10% at this point and unwilling to buy old war zone junk. I've learned there is no money to be made in that asset class, simply big headaches. Although purchase price is critical to achieving success in RE, I'm a firm believer in owning the correct asset class. If you have high turnover and constant repairs it makes no difference how cheap your purchase price will be. This is a trap we all strugle with.