Investor · Member since 2019 · 41 posts · 19 votes
Hello.
I own a condo in Long Beach, CA, free and clear, that is worth around 500k. I have good tenants in it who pay rent of $2290/mo. I've been getting antsy to reinvest but don't have the savings to do it. What would you do? Would you refinance this property with cashout and use the cash as a downpayment for a SFH that would increase in value more than a condo? Would you sell the condo and use the full 500k as a downpayment on an SFH? My markets are very expensive: Southern California, Long Beach and Santa Barbara areas in particular. I would love to get a duplex to rent long term in one and short-term the other. I could transfer my tenants into the new place, or not (my markets are highly rentable). WWYD??
@Jennifer Gardner I would not sell any property in CA that is cash flowing. You have the best of both world--an appreciation asset that is also producing income. I would pull money out in a refi and invest in more affordable markets in the Midwest. Personally, I like Indianapolis, Kansas City and the Quad Cities where you can still get good COC returns.
@Jennifer Gardner if you had a SFH I would not sell in your situation, but would cash out refi. The condo situation makes it a bit gray. However, one of your biggest advantages is that your property tax basis is lower relative to current investors, so you have structural margin to capture going forward.
Remember that anytime you sell you have transaction inefficiencies (commission, tax, etc), so that is a barrier to overcome.
You’ll likely have more appreciation coming your way so that gain will beat any cash flow you can capture in Midwest markets…. With a lot less headache