Real Estate Agent · Jacksonville Florida · Member since 2020 · 48 posts · 30 votes
Hello! I am having trouble deciding on selling or keeping my house in Jersey that my husband and I have been living in since 2020. We have made major improvments, new roof, windows, kitchen total rehab granite countertops and added bedroom. Purchased for 180,000 and now it may be worth 275,000 or more
I like the buy and hold rental stradegy and want to keep it and rent it for 2200 a month. The mortgage is 1400. Its in Northfield NJ. Great neighborhood. Solid house 3 bd 1.5 bath.
my hubby wants to sell, he received orders to Jacksonville FL and we could buy a multifamily with the proceeds from the house.
I want long term growth. I was thinking of getting a Heloc and keeping . Pros cons?
Realtor · UT · Member since 2022 · 63 posts · 42 votes
4y
Wow, that is amazing! I was in your situation about 2 years ago. I put a lot of work into a property that was a mother-in-law single-family home and I was able to really showed the property's value. I wanted to expand and I looked into doing a cash out refi or selling. I ended up selling the property and using a 1031 exchange into a 10 unit building. It has now snowballed into 49 rental units in just 2 years. Sometimes it is scary to sell or it sucks to sell something you have worked so hard in but if you can turn it into something bigger, why not?
On the other hand, if you are able to get a cash-out refi and you can stay in positive cash flow you can keep your current property and still expand. That may be a good option to look into as well.
Crestview, FL · Member since 2021 · 109 posts · 76 votes
4y
Sounds like you have done an amazing job! Im on the keep side. Is your husband military? Did you buy the home with a VA loan? You have a ton of options but sounds like most of them as a begining investor is on the keep side.
Personally i would keep it, use the VA loan to buy a four-plex, and house hack. With that strategy youll have tons of cashflow and reuse the va loan a year later or fha.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
4y
Be sure to factor in the section 121 gain exclusion on the sale of a primary residence. Would not want to lose a tax free gain on ~$100k in appreciation if you convert to a rental and not sell within 3 years.
Realtor · UT · Member since 2022 · 63 posts · 42 votes
4y
Wow, that is amazing! I was in your situation about 2 years ago. I put a lot of work into a property that was a mother-in-law single-family home and I was able to really showed the property's value. I wanted to expand and I looked into doing a cash out refi or selling. I ended up selling the property and using a 1031 exchange into a 10 unit building. It has now snowballed into 49 rental units in just 2 years. Sometimes it is scary to sell or it sucks to sell something you have worked so hard in but if you can turn it into something bigger, why not?
On the other hand, if you are able to get a cash-out refi and you can stay in positive cash flow you can keep your current property and still expand. That may be a good option to look into as well.
Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes
4y
as @Mike Dymski pointed out you would get the primary residence exclusion on your tax return which would make me lean towards selling it. The one thing that could make me pause is if you have a super low interest rate on the home then I might try and keep the home and go house hack a 2-4 unit in FL if I'm not mistaken you could use the VA loan again.
Good luck and thank you and your husband both for your service (at least that was my assumption),
Holy Cow girl, you sound like you are setting the world on fire! I would love to hear how you made that happen in 2 years. Congratulations on absolutely killing it,
sell. how are you going to manage an out of state rental? you will have to pay to a property manager to do so. if you had 3 or 4 of these it would make more sense. I do not see a need in property managers for most small portfolios. also, is NJ a landlord friendly state? yep, I do not think so. get rid of it.
Hello! I am having trouble deciding on selling or keeping my house in Jersey that my husband and I have been living in since 2020. We have made major improvments, new roof, windows, kitchen total rehab granite countertops and added bedroom. Purchased for 180,000 and now it may be worth 275,000 or more
I like the buy and hold rental stradegy and want to keep it and rent it for 2200 a month. The mortgage is 1400. Its in Northfield NJ. Great neighborhood. Solid house 3 bd 1.5 bath.
my hubby wants to sell, he received orders to Jacksonville FL and we could buy a multifamily with the proceeds from the house.
I want long term growth. I was thinking of getting a Heloc and keeping . Pros cons?
Hello! I am having trouble deciding on selling or keeping my house in Jersey that my husband and I have been living in since 2020. We have made major improvments, new roof, windows, kitchen total rehab granite countertops and added bedroom. Purchased for 180,000 and now it may be worth 275,000 or more
I like the buy and hold rental stradegy and want to keep it and rent it for 2200 a month. The mortgage is 1400. Its in Northfield NJ. Great neighborhood. Solid house 3 bd 1.5 bath.
my hubby wants to sell, he received orders to Jacksonville FL and we could buy a multifamily with the proceeds from the house.
I want long term growth. I was thinking of getting a Heloc and keeping . Pros cons?
Buy or sell?
thanks!
Sell it. It seems that you are a very focused person, I'm sure you can do it again.
Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
4y
@Alana Reynolds Just based on the numbers you provided, I would sell this. You will be able to take advantage of section 121 exclusion and this property does not seem to cash flow as well as other properties. The mortgage is well over half of your rent and once you take into account all of the other expenses, you aren't left with a whole lot at the end of the month.
Real Estate Agent · Jacksonville Florida · Member since 2020 · 48 posts · 30 votes
4y
Yes we had used the VA loan! If we keep the house we are approved for 275k with left over VA benefits. The issue is that may not be enough to buy a multifamily to house hack
Lender · AZ · Member since 2022 · 148 posts · 95 votes
4y
As a military investor myself, I would probably sell this property. Knowing that you would be able to restore your VA entitlement fully with more liquid capital could put you in a great position to buy a multi-family property in FL and have cash for other, maybe out of market investments.
However if you did want to keep it for sentimental reasons i.e. family in the area or plan to live there after separating you could use the Navy Federal homebuyers choice loan which is another 0 down loan option military members have access to. Although a little higher interest rate still a great tool. You can purchase up to 2 unit property with it and then still have VA entitlement left over.
Real Estate Agent · Jacksonville Florida · Member since 2020 · 48 posts · 30 votes
4y
@Doug Spence
Thanks, I think so too.
I am wondering if I can both keep the house and purchase a multifamily as well. I am going to start doing research on the Jacksonville area and see what the multifamilies are going for. I have a pre qual for 275k and if I rent out the house I can show the lease to count the rental income for a bigger pre approval.
The interest rate on the mortgage is currently VERY low 2.3 percent I believe. A refi would not be a good way to go because it would still make the va loan for a lessor amount because of the debt, regardless of what loan it is.
Real Estate Broker · Jacksonville FL & Middletown, CT · Member since 2008 · 1k+ posts · 632 votes
4y
Hi Alana - Chiming in from Jacksonville FL. I assume hubby is being transferred to Mayport or NAS Jax. I live and work here in Jax and have a business up north in CT as well - which is very similar to the NJ market.
Two things you may want to consider: $275k will not get you a multi anywhere here and if you do find one it will be in a terrible location or needing major work (not VA qualifying material). In fact you will have difficulty with the VA loan altogether right now as the market is flush with out of town cash buyers. $275k will get you a decent single fam in a decent neighborhood, but even then you will face intense competition from others with cash and "more desirable" loans. VA may allow cash back for closing costs, but good luck trying to find ANY seller to allow that here now. Keep in mind you will have to count on paying your closing costs out of pocket and maybe appraisal gap as well, which will affect your out of pocket costs.
As far as the up north market: Your rental numbers don't sound bad as long as long as you are including P&I, taxes and insurance in your mortgage payment. However, I would not count on appreciation continuing in the manner it has. I am already seeing signs of a market turn up north, and rising rates will dampen the market further.
To summarize my 2 cents: If you keep the NJ home as a rental, be prepared to significantly downgrade your expectations for your purchase here in Jax. If buying the multi is more important than keeping the NJ rental, sell it and come here with a much higher budget, and ideally a whole bunch of cash.
Real Estate Agent · Destin, FL · Member since 2019 · 116 posts · 111 votes
4y
How much did you put into the rehab and what is your left on your note?
A heloc or cash out refi can be great if you're holding but remember it may change your qualifying power to purchase something else. In this case I would compare what I could purchase with the profits vs what holding onto this would like like financially. Could you purchase more homes or multifamily if you sold, in a higher appreciation area and make the same on rents? Jacksonville is a great market so I would try and capitalize on it as much as you can.
When you subtract taxes and insurance from the 800 cash flow, this is probably negative or very little cf. The value is in the equity, but cashed out and moved to a property with much better cf
Banker · Huntington Beach, CA · Member since 2018 · 99 posts · 100 votes
4y
Hi @Alana Reynolds There are two ways I would look at this if I were in your situation;
The first and most straight forward would be, if I had any concerns about long distance landlording, to sell, use some of the proceeds as a down-payment on a duplex and use a conventional loan to start the process of my buy and hold strategy in the new location. (I don't like the funding fee associated with the VA loan unless you have non)
The second, since there's the likelihood of being stationed somewhere else in the future, I may as well get comfy with long distance landlording. I would take a HELOC on the property and use that as a down-payment in the new city (I may not have enough DTI to get a duplex, but it'd be the same since I'd have 2 properties anyway) I will still use a conventional loan if I am subject to VA funding fees. In 2025, once I've owned the NJ property for 5years and lived in it for 2 out of the 5, I will revisit the option of selling again since I would be able to avoid the taxes on the gains and maybe buy something closer to me (ask your tax person)
In regards to the conventional loan, if the down-payment is less than 20%, I'll be fine with PMI as long as I have confirmation preferably in writing that it will be taken off once I can prove 80% LTV (There may be some math to do to determine if the VA funding fee is a better value than PMI)
How much did you put into the rehab and what is your left on your note?
A heloc or cash out refi can be great if you're holding but remember it may change your qualifying power to purchase something else. In this case I would compare what I could purchase with the profits vs what holding onto this would like like financially. Could you purchase more homes or multifamily if you sold, in a higher appreciation area and make the same on rents? Jacksonville is a great market so I would try and capitalize on it as much as you can.
We have put in around 70k and owe about 180k. The realtor I spoke to said multifamiles are being purchased by cash buys and I am looking at getting only a single family in Jacksonville. I am open to getting a single family and making into a multi if the zoning allows it but I am told that the desirable areas i am interested in don't. So why trade a single family for just another single family when I could potentially keep the Jersey house, earn cash flow, and also buy a single family in Jacksonville to house hack ? I am trying to justify it, maybe I have to find a multifamily in a less desirable area? Or zoning that allows the conversion of a sfh. Know any realtors within a 45 min radius of Hitron airstation?? Pre approved when keeping the house for 275k. Taxes and insurance are included in the 1400 a month mortgage. House could rent for 2200.
When you subtract taxes and insurance from the 800 cash flow, this is probably negative or very little cf. The value is in the equity, but cashed out and moved to a property with much better cf
Taxes and insurance are included in the 1400 a month expense. The 800 can go straight to reserves for any big repairs that come up or reinvested. In this case, would you still sell?
As a military investor myself, I would probably sell this property. Knowing that you would be able to restore your VA entitlement fully with more liquid capital could put you in a great position to buy a multi-family property in FL and have cash for other, maybe out of market investments.
However if you did want to keep it for sentimental reasons i.e. family in the area or plan to live there after separating you could use the Navy Federal homebuyers choice loan which is another 0 down loan option military members have access to. Although a little higher interest rate still a great tool. You can purchase up to 2 unit property with it and then still have VA entitlement left over.
I spoke to a realtor in Jacksonville and he bluntly informed me that sellers are not even reading VA offers! Also that multifamilies are being purchased by cash buyers. It sounds to me like I don't have enough funds to purchase a multifamily even if I do sell or it would take a long time to find one to accept my non cash offer
Sounds like you have done an amazing job! Im on the keep side. Is your husband military? Did you buy the home with a VA loan? You have a ton of options but sounds like most of them as a begining investor is on the keep side.
Personally i would keep it, use the VA loan to buy a four-plex, and house hack. With that strategy youll have tons of cashflow and reuse the va loan a year later or fha.
Good luck!
We are both military, and have both already used the va loans. I spoke to a realtor and they said that multifamily properties are being bought by cash offers and a VA offer would be ignored. So I think I will have to house hack a single family
Wow, that is amazing! I was in your situation about 2 years ago. I put a lot of work into a property that was a mother-in-law single-family home and I was able to really showed the property's value. I wanted to expand and I looked into doing a cash out refi or selling. I ended up selling the property and using a 1031 exchange into a 10 unit building. It has now snowballed into 49 rental units in just 2 years. Sometimes it is scary to sell or it sucks to sell something you have worked so hard in but if you can turn it into something bigger, why not?
On the other hand, if you are able to get a cash-out refi and you can stay in positive cash flow you can keep your current property and still expand. That may be a good option to look into as well.
I hope this helped!
-Jocelyn :)
Thats amazing that you were able to grow so fast! I researched tje 1031 exchange and it doesnt look like my property qualifies, does the laws accociated with it vary by state? It does not seem like I can turn the sell of the house into something bigger according to a realtor in that area. I found him on bigger pockets and its sounds like a pre approval of 400k will only get me a single family in my desired locations. Maybe i need to check out different areas and think out of the box more!
When you subtract taxes and insurance from the 800 cash flow, this is probably negative or very little cf. The value is in the equity, but cashed out and moved to a property with much better cf
Taxes and insurance are included in the 1400 a month expense. The 800 can go straight to reserves for any big repairs that come up or reinvested. In this case, would you still sell?
You mentioned repairs done. After repairs, how much equity is there?
I think it depends on if you want to manage the property long distance. This can be challenging! Why not sell and purchase the multifamily locally? Makes more sense to manage where you are but I have seen both sides work out successfully.