Should I sell?

Question

Hello everyone,

I bought my 4 unit building for $175,000, Saint John NB, in 2019 I could sell it now for $450,000. Rents together are $3400 each month. A home run i would say.

Im moving to San Diego next year and want to buy a house hack but its insanely expensive. I have analyses paralysis and have no idea what to do.

Do I sell and pay capital gains and dump the money into a different market or do i refi and buy something else ? Should I be a private lender since rates are so high?

My gut says don't sell and keep buying but just feeling very stuck. Help!!! any advice would be amazing!!!

Thank you

Dimitrius Kiritsis · Answer

Hey @Amanda Scheller, what did you ending up deciding on? Personally, I'm a fan of getting my equity to work as much as possible for me.

A good trick to achieve this is the return on equity calculation. It is your net cashflow divided by your net proceeds (minus realtor and other fees).

Eg. 12,000 net cf per year / 250,000 = 4.8% ROE

Garrett Christensen · Answer

That is a tough decision. It's hard for anyone to give advice on such a personal decision, but I'm almost always in the position of never selling. Especially when it's a good deal like you have. This is only exaggerated not that mortgage rates are higher. If you can make something work in SD without selling I'd try to do that.

Robert Rixer · Answer

Why house hack? The ideal investment and ideal place to live are rarely the same place. If purchase price doesn't make sense in San Diego, rent there and save the money to invest in a market you know and works out on paper.

Wale Lawal · Answer

@Amanda Scheller

Selling a property in St. John, NB has very promising prospects for future returns. Therefore, assessing the purposes from selling off assets or holding on to them, refinancing will diversify the assets in your portfolio while exploring house hacking in San Diego will assist you to exploit everything possible. This means that there will be realization of capital gains if you sell however this might create some liabilities on taxes.

Investing in different markets and property types diversifies your portfolio. Conversely, a real estate advisor or financial planner will assist you in making informed decisions that align with your long-term goals.

Good luck!

Maz Pardhan · Answer

Hey Amanda, fellow Vancouverite here with properties in Ontario. Whoever told you that you can't do a heloc because it's not your principal residence is wrong. I have two rental units with a heloc on each. Happy to introduce you to my bankers who can do it for you, although with rates where they are...

House hacking is a great strategy if you are planning on living and staying in San Diego. Another option is to invest in a better performing US market and rent in San Diego.

Have you looked at othe rmarkets?

Robert Rixer · Answer

People very rarely regret holding long term. It may not be how you planned it, but you won't regret it.

Tramaine Robinson · Answer

@Amanda Scheller smart! I have a building worth mid 400’s that I owe 180k on. Cash flows me about $1k but I’m a keep it. The 10 year affect of appreciation and principal pay down is crazy

Amanda Scheller · Answer

I ended up just keeping it. Buy and hold was my main goal. Im still trying to figure out what my next move is. i want my money to work hard for me.

Tramaine Robinson · Answer

@Amanda Scheller What did you end up doing? In a similar position but I'm not moving outta state..

Elijah ROberts · Answer

I'm not expert in Real estate, but from a business perspective, if you sell, you'd have to pay capital gains tax. The capital gains will be subject to (450k-175k) =275,000. Not sure how much they'd tax you, but I imagine NB Capital Gain is at 50%. On the other hand, you could refinance at 60% market value, you could pull out 270K without the burden of Tax, your house will still have good cashflow with the mortgage of payment on 270k.

Should I sell?

Should I sell?

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