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Updated over 4 years ago on . Most recent reply

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Riley Way
  • Rental Property Investor
  • San Diego, CA
13
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12
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New investor seeking advice on what to do with property!

Riley Way
  • Rental Property Investor
  • San Diego, CA
Posted

Hello everyone! Happy thanksgiving!

Like the title says I am a new investor (one year into it). On my first property, we moved out earlier this year and have been renting it out. I refinanced and will dive into the numbers for you guys.

Initial down payment: $0

House value: $420,000

Mortgage: 318,000 @ 2.25 fixed

Mortgage payment $1,648

HOA: $350

Cash flow: $300

We don’t save extra money for expenses every month because we just have $5,000 sitting in a savings account for rainy days.

So, currently we have $100k in equity (25% growth per year of ownership) and a low cash flow. My question to you guys is: is this a bad investment since it only brings in 1%? Obviously the insane property value hike is nice. But what if that wasn’t the case? Should I keep it or sell it, cash in the equity and reinvest elsewhere?

Most Popular Reply

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13,477
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Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
19,547
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13,477
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Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
Replied

This is where the 1% rule, and percentages in general, are misleading at best...and lie to you.  Who cares what the 1% rule says?  You are making $300/month in cash flow.  If you didn't know anything about any 1% rule, would you be happy with 300/month in CF?

The day I start spending percentages, is the day I care about them.

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