I'm looking for some unbiased input on what to do next. Here's the cliff notes to get you up to speed.
-Purchased a duplex in 2015 to house Jack
-Slowly(quickly?) Discovered that I don't like doing a lot of the things a landlord does and have problems with being emotionally detached about the business.
-Property has appreciated significantly thanks to SLC being hot.
I'm now 4 years into this. The idea has been suggested and pushed by friends (who aren't real estate investors) about cashing out. I'm not interested in that, but am interested in a pivot of sorts in my strategy.
The idea that has formulated in my head would be to sell the property I have, and use the proceeds to purchase 2, or more, properties in Logan, to be managed by a property management company. This should solve my personal hang ups about being a landlord, but still allow me to invest long term. The downside would be that I would have to devote more of my income to my own housing, but the income from the 2 new properties would offset that, and would allow me to put money together to grow my portfolio.
I have gone as far as running a property or two through the calculators here on BP with some guesstimates on the high end for expenses. It would be close to cash flowing with the MLS price and rents listed.
I guess what I'm really asking here is this:
Is this a viable strategy?
If you were in my position, would you do it?
What am I missing?
Hey @RJ Davies ! Greetings from Park City, my short-term home before I head back from OKC. It's been great catching up with people at the SL REIA meetings.
Great work getting into the game and doing that at the perfect time! The appreciation in SLC over the past 4 years has been so great (nearly anything on the East Bench and so much else) and that's a great situation to be in, but the dislike of land lording isn't.
What I would do in the situation, as I understand it is this: use a HELOC to pull out enough equity from my House Hack/personal home to buy a killer property or two in Logan (great market with only upside in its future!), then hire a PM to manage your existing property and one to manage the Logan property(s?). This would add SOME costs to your personal housing, but it may allow you to thrive in the house-hack environment for longer, further realizing gain through it.
What I like about this process is that you are able to keep your current sweet situation (including ALL of the equity you've gained through appreciation and debt paydown by not paying real estate commissions or costs of sale), you get out of the management tasks you dislike (either on ONLY the other unit in your duplex or on both . . .up to you), and you put your equity to work with a low cost HELOC. You go from two units that are draining you to six( -- thinking of a fourplex I saw last night in Logan) with less drain to you personally. 15, 20, or even 30-years from now can you imagine the affect?
On the road with you,
@RJ Davies in theory nothing is preventing you from house hacking something else but having it professionally managed, This strategy will work but may be inefficient. Why not keep the current property even if you move out then refinance and buy another or a primary residence or both if possible.
I understand your thoughts completely. I personally am considering cashing out one or two properties and using proceeds to put 20% down on 2-4 properties.
If I were in your position and only owned 1 property (my duplex house hack) I would do the following.
I would sell it and use the money to purchase 2 investment properties with 20-25% down.
I would also purchase another personal residence and househack again. I would do 5% down conventional owner occupied. That way you can get out of PMI at some point unlike FHA. I would do a Mother in law that is completely separate from your living area. Mother in law tends to cashflow better than duplex for an owner occupied in the Salt lake valley and surrounding areas.
If you are completely over the landlord thing and tired of househacking I would still purchase your own home again with low money down in addition to your investment properties. I believe there may a small hiccup in the next few years where the market will level out and may appear to decrease slightly as it corrects. However I also believe with the expected population and job growth to double in the next 15 years it would be reasonable to expect home values to double in the next 15-20 years as well.
@RJ Davies That is a tough call. I always say the nice thing about real estate is there are no rules and you can do whatever you want, and the bad thing about real estate is there are no rules and you can do whatever you want.
The challenge is that the only strategy that will truly work is the one that you have to get you to your own specific goals. I would slow down and really think about what your goals are for being in real estate and what you want your life to look like as a result of owning properties.
From there you create a strategy to get you there. If you ask 5 people we all know you will get 7 different answers. And bring non real estate people in and the those numbers go off the charts.
I would focus first on the end goal and then decide from there what is best for you and the plan to get you there. Buying / Selling / Re-fi'ing these are all great if there is direct intent and purpose. If not it can just be busy work, and busy does not guarantee forward movement, and definitely not forward in the right direction.
I was very similar to you before asking and getting tons of advice from people. The problem was this was their goals and agenda not mine. So did not get me closer to my goal it actually took me further away.
Sorry to not have an answer... But that is your answer