Should i sell or refi

Question

I own a duplex in cleveland (North collinwood area). I dont owe anything on the property, ot was purchased and completely reno'd cash. I have about 60k in it and it is worth about double now. I was planning on selling and possibly looking at a fix and flip while the market is still high. I would eventually want to buy some rentals and ecentually work my way to large number of units apartment complexes once i had enough for a down payment. What do you guys think, should i sell or refi? I wouldnt have to pay any taxes since i lived here for 2 years.

Also i will be moving regardless if i keep it and refi.

taxes and expenses are 3600 a year and rent is 1700 a year.

Also i will be moving regardless if i keep it and refi.

taxes and expenses are 3600 a year and rent is 1700 a year.

Ryan Evans · Answer

How well does your agent know the neighborhood? It's easy to pull comps from over in Euclid and pump your numbers, but only a couple doubles have sold for over 100k in the past two years. And I get my data from the MLS since I have my license as well. Even if you can get it appraised at 100k and take out 70k then you'll be in a great position to flip or buy other rentals and you can still sell without paying taxes within a couple of years, so maybe that's worth considering.

Single families can sell for more, but they're really in a different property class with a different set of buyers.

Robert Matelski · Answer

I believe it is definitely a stretch to think that it's worth 2x what you've got into it... $120K would be a really hard sell on Mozina. You could probably appraise pretty easily at $90-100K though, allowing you to pull ~$75K out, which you could then use to pay cash for another property or even make a down payment on a small apartment building. I am bullish on Cleveland and especially Euclid and North Collinwood (values still are not yet quite back up to their 2006 level for most properties/streets but they are heading there), and you'll likely see further value increases if you hold onto it and keep letting it cash flow for the long haul. Assuming you've got good credit, you can lock in a super low fixed rate for 30 years now (and btw, refi now, while you are still living in it, to get the best rate).

Robert Matelski · Answer

Everything Ryan Evans said is spot on. The houses that have sold for more than $100K are either SFRs and therefore not valid as comps for your duplex, or they are simply not comparable from a location standpoint.

I am familiar with pretty much every property that has sold in the past decade or so in my areas of interest (the Cleveland Euclid border area being one of them... I challenge pretty much anyone, including licensed agents, to know the market better than I do... though Ryan could probably give me a run for my money at this point), and I know how to navigate public records (https://myplace.cuyahogacounty.us/,https://recorder.cuyahogacounty.us/, etc.), MLS listings (including sold), etc. so it was extremely easy to see that your property is on Mozina since you own it in your own name. Yes, your property is charming (I love those solid brick duplexes from the 1920s) and I don't doubt that you've done a nice job of making it solid and inviting inside since you bought it... but the location you're at is still not going to command the same price point as a similar duplex right off of Lakeshore. If you plopped your house onto a street like East Park or Neff, a block or less from Lakeshore, then sure, you could reasonably get $120K... but not presently where you are (directly across from a bar, basically right at a busy intersection, and with a view of a freeway on-ramp from the yard). But why sell it at all?! If you pull out ~$75K your payments will be under $400/mo., and you can use that to pay cash for another house, or put a down payment on a small apartment building even. Keep the Mozina property as a long-term cash flow machine. Even if you just keep buying another duplex, fixing it up, pulling the cash out, then moving on to the next one and doing it again and again, you'll have enough cash flow to retire in a decade or two.

Before you move out, you might consider buying the land bank property next door to yours (http://www.cuyahogalandbank.org/sideYard.php). You'll need to get current on your property taxes (which is something you will need to do before you apply for a mortgage on it anyhow), but once you do, it's likely that you can greatly expand your lot size (and therefore your property's market value and appeal) for next to nothing.

Ryan Evans · Answer

If you're looking to buy rentals and flip then it might make sense to hold on to it. You're already in a good cash flow area and if it's a nice remodel then you should make the most of it and just pull some cash out to flip with.

And where are you getting the 120K ARV? North Collinwood is coming up, sure, but nothing sold last year over 107k and that was a pretty nice one on East Park so that will be a tough sell. My friend who brokered that one for 107k listed another duplex down the street for 125k the other day, so you might have a good comp to go off soon. I invest and live in the neighborhood, so I'd love to see high comps above 120k, but I'm skeptical.

James Woyton · Answer

@Robert matelski  @Ryan Evans

Remington Lyman · Answer

@James Woyton If you own a duplex free and clear I would not sell it. That should be an amazing rental. Leverage it to buy more!

James Woyton · Answer

Ryan Evans who is your friend?

James Woyton · Answer

I was told by a real estate agent in the area to expect around 115k.  It's a beautiful home with private fishing new roof furnaces hot water tanks.  Everything is solid and ready to go for 15 yrs.  Where do you guys get your comps from.  I only have looked on sold homes on Zillow and have seen homes go for more than 107k. Is this info not correct?  Also how did you know it was on mozina?

Robert Matelski · Answer

That size of house on that stretch of Neff can possibly command $125K... but Mozina probably can't break $100K now IMO.

Dan Mitchen · Answer

@James Woyton nice!! I'd personally refi it unless I had an opportunity to deploy that cash into a nice apartment deal in the very near future. With interest rates being so low though, I'd take advantage of interest rates and refi. I'm working on 2 rehabs right now in Cleveland where once I'm done, I'll refi and Airbnb the properties. Flipping them both are pretty appealing (both in the Ohio City area of Cleveland), but refi and Airbnb makes more sense long term.

Also for the apartments- you can get into deals with very little capital if you're able to find the deal off-market and have access to private money.

Should i sell or refi

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