Hello fellows, I am in a situation that I need more advice than my uncle Joe.

I have a house with my business partner with $180K in equity, if I sell, I will get $115K and some business savings of $50K for a total of $165K cash that I can put in a bigger property.

If I buy out my partner for $50K, I will ended up with the house (it has a detached ADU), equity overtime and the cashflow that generates (in Airbnb) for $1000/mo NET, but I won't have any cash to invest, unless I pull a HELOC.
Any thoughts?
Thank you!

Hi @Victor Valle -

I don't think you've given a complete picture to us yet ... my initial questions would be:

1) If you sell and get the $165k, what does the new property look like (as in, cost / location / prop type / cash flow)?

2) If you buy out your partner, what's the $1k/mo cash flow going towards? And please don't say Voodoo donuts :)

3) last but not least, what are your goals for this investment?  Do you need cash flow?  Are you going for capital growth?

Hello @Brian Spar, thanks for your reply.

1) The new property will have to generate cash flow, that's a good downpayment for either a multiunit or a small commercial property.
2) Haha, no Voodoo donuts, but it will be part of my income, towards the goal to be financially free.
3) I definitely need cashflow however I don't want to get stuck with an out of state property (Portland OR) with buried equity that for some reason I can't pull in the future.

I guess I need to find out how far the $165K will take me, maybe I can buy one or two properties that generate $1000 or more per month in growing areas like Charlotte, or invest in new construction.

@Brian Sparr

@Brian Sparrundefined

@Victor Valle -

Knowing what you'd do with the $165k is the key piece ... until you have that identified, we're comparing apples to oranges.

If you're curious what that $165k could get you in the Raleigh/Triangle metro, shoot me a PM - I'm happy to share some thoughts.

@Victor Valle $1000/mo income on a $165k investment is about a 7% return.

If you feel like you can invest than for better than 7% (I think you can), the nest thing to do would be to sell and reinvest.

If you feel 7% is about the best you can do, or you are comfortable with, hold onto it. $1000/mo is a nice foundation to build off of

@Victor Valle I don’t know how the market in Portland is but there are areas you can get so much more than 1k a month investing 180k

(More than double that).

Hey @Victor Valle

I think Brian is right, without a little more info about where you'll put the money or your goals it's tough to say. I think one piece to add into your equation is where is the property located in Portland? To me that's a big difference. If you've got a great property that is rehabbed and in an amazing, impacted, high-demand area then there are some intangibles (yes, that's code for future appreciation) that may make you want to hang on as Portland continues to grow and develop. If the house is further out and just in an okay area then potentially letting it go could be a better choice. 

Agree, the house is located in a good area (Rose City Neighborhood) between downtown and the airport.
The house is a remodeled house 3 bed/2bath with a detached ADU,
The one thing that worries me is the fact that at some point appreciation will slow down compared to other markets with faster appreciation that can use that money to for a long hold.
So far the intention is to invest in distressed SFR to rehab and rent out, however, I like the idea of new construction and that option will require more capital.

I think as a general rule, pulling money out to reinvest is usually better to create velocity.  It might be a step back in the short term but you should be able to grow and really push your ball down the hill. 

@Brad Hammond

Yes, that is the direction that I will take, I am putting the house on the market next week, and look for other ventures in another market, being a landlord in Portland has way too many disadvantages, even with Airbnb.

Thanks to all, I will update the progress.

Originally posted by @Victor Valle:

@Brad Hammond

Yes, that is the direction that I will take, I am putting the house on the market next week, and look for other ventures in another market, being a landlord in Portland has way too many disadvantages, even with Airbnb.

Thanks to all, I will update the progress.

Victor, The opportunity of reinvesting that equity into another property will answer your questions by itself. I would say do an analysis and see what your pre-tax cashflow, after-tax cashflow, after-tax + loan pay down and Total Return (after-tax + loan pay down + appreciation) are as both numbers and percentages. Then do the same after selling the property, reinvesting it into a small multifamily and compare to your current. I do this ALL the time with my clients portfolios to decide on which opportunity improves current. 99% of the time selling the SFH and buying multifamily will improve your returns. It just depends on your goals... If you're a high earner and are willing to give up a little cashflow for capital appreciation and pay down, then exchange into a larger property. I would be happy to help you if you sent a PM.