Buy and hold forever or sell after several years?
Hello. My name is Chris and I am an Investor.
I am curious about long term strategies. I am a buy and hold investor that is curious about long term strategy regarding holding forever or close to it or selling after a period of service and reinvesting equity. I have 11 rentals now and all have been bought and likely will be bought in some form of distressed fashion. I've bought everything from a duplex on MLS in ok shape that I put some money into before renting to my 3rd townhouse that caught fire 4 years ago and just sat there. My question is specific to single family real estate.
I have some rentals that I have around $50-$60K invested in that rent for $760 - $825/month. These units appraise for $50-$75K and thus don't have tons of equity in them yet as I have leveraged them in the last two years at near 80% ltv. The value in these units lies in the good cashflow.
On the other hand, I have two...and intend to buy more....single family units that are in better areas and school districts. They are the bread and butter 3/2/2, 1500 sq foot house. Again, I bought both of these as flips but rehabbed them for rental and once vacant and cleaned up would be in good condition to sell. The problem with these two is that I generate less cashflow with them but they have way more equity. For these two units, I have one with about $80K invested that rents for $975/month and another with about $78K invested that rents for $1000/month. But the first one is worth around $115K and the second closer to $120K.
These are my nicest units in the best areas I own and I intend to get more. With the level of rehab in them, especially the one that rents for $1000/month....if I were to sell them in the next 3-7 years, I am only looking at new carpet and interior paint and can really not worry about Capex spending as it has been rehabbed with all new inside and out etc. Now....were I to hold onto it for 10 - 20 years, even if I sold then, I am likely looking at exterior paint again, perhaps new privacy fence and even roof and condenser, appliances etc. If I sell at 1 year and 1 day, I get the preferred tax treatment of 20%.....I don't anticipate messing with 1031 for a while so let's exclude that for now. But I can sell the same house 5 years after I put in new windows, roof, siding, fence, appliances, hvac etc and get the benefit of 5 years of cash flow vs just 1 without having to worry about replacing those things....(due to wear and tear of course.)
Am I better to treat these higher end properties like long term, tax advantaged flips or should I hold these better properties (lower cash flow) properties in my portfolio for the long haul and be diversified?
Sorry for the long post....just like to be thorough.