This is not directly related to investment, but it is about real estate. My mom is currently living in Las Vegas, Nevada (Summerlin). She purchased a single family home there about 4 years ago for $150,000. It seems that similar homes are selling for around $200,000 now. The issue is that she is planning to move to Japan to be close to my wife and I in two years, and we are wondering whether it is better to cash out now and maybe buy a home we could turn into a rental later (she can't rent the house house owns now because of HOA rules) or stay put. I know the market can't be predicted exactly, but does anyone have a suggestion about how they would go about making this decision? Thanks.
In Las Vegas right now the market is neutral so demand and supply are at a standstill. A typical 3 bedrooms/ 2 baths does stick around the 200,000 point. There haven't been any indication that a new primary job supplier will be coming into the area anytime soon to drive up demand (and therefore the price of the property), especially not in the next 2 years, so I would say that 200,000 is a stable price to sell at since you are making a profit from initial investment.
There are other factors to consider, however, such as where she'll be living in the meanwhile between now and moving to Japan? Leasing/renting is a viable option when you're planning to move out of the area, but she also have the option of re-investing her money from the sale into a more valuable property to live in and sell for a profit after the 2 years mark. I live in the area so if you want to reach out for some advice, I'd be more than happy to go more indepth about your situation and needs. Just shoot me a message.
I'm a realtor/investor here in Vegas. Just got an accepted offer of 70k yesterday on a 2 bedroom condo w/o rental restrictions. If im in her shoes, i'd sell the house then use the equity towards the purchase of a condo. Equity will be around 40-80k, just rough estimate based solely on the price and time she bought it. Either purchase with cash or with big down payment with the goal of paying it off about two years. Then when she moves to Japan, she will have a cash flow on a paid off property and does not have to worry on the ups and downs of the market. Good luck. :)
I'd argue that paying in full with cash is not a smart investor's way of thinking, she'd be putting too much of her own money at risk for no reason rather than having it be tied up to one property. The main reason why one can get so much farther with real estate is from the leverage one gets from being able to borrow and use other people's money to purchase and invest.
I think the question was about what a mom who wants to move out of the country to be with her family should do with her equity. If it's me I would simplify it by investing conservatively rather than leveraging and not having enough equity in the property should sudden needs arise. Investors think different. At some point in our lives, some would focus more on protecting her investments/equity and enjoying it, rather than creating ways to multiply it but of course with additional risks.
@Daniel Mills If your mom can't rent the property you may want to consider a 1039 exchange for a property that you can rent. I personally prefer single family over condos because typically the HOA fee is much lower and also average turnover of tenants much lower.
Yes, I think this is not a pure investment question here. For my mother, who is not an investor, taking on a lot of debt, even if it is good debt", is probably not within her comfort zone. I was actually able to get her real estate agent to give me the comps and it seems that the property has increased in value by $70,000 in the last five years. So, I think we are going to sell it and purchase a property in Idaho (where I have my other investment properties) in cash. She will live there for a year or two, and when she moves to Japan it will just becoming another property in our portfolio. Thanks for the advice guys.
The main thing about investment is having a good team of people to help with management. Since she is going to be in Japan, who will oversea everything to ensure that the property is managed property. Since you are currently investing in Idaho, then taking on another property with the correct team is a fantastic way to go. Besides, getting a 3-4% Cap Rate barely seems worth it. Also, buying condos and watching the HOA management companies increase 20-30$ a month per year for HOA dues is not my idea of fun either.
Best of luck
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