Factors for holding vs selling

[Mimi H.]

As someone that's held real estate for some time, and have sold off others, I'd be curious to hear of other BPer's factors for holding vs selling.

As an example, the Bay Area market has appreciated massively in the past few years (even before then but serious hockey stick in the past 3!) so for any investors out there that had bought in at the low, has anyone gotten out while it's still super hot or are rents covering to the point where it's just worthwhile to hold somewhat indefinitely?

I tend to hold on but I'm curious to hear how others structure things, mostly because I'd love to know if I could do things better! (differently?)

[Account Closed]

Mimi,

It really depends on your goals.  Bought low = Benefit of Prop 13 for years to come in CA.  Would you rather own 24.8 doors in the Bay Area or 248 doors in fly over states?  That's 90% less toilets, kitchens, water heaters, HVAC and roof to worry about.  Do you think the tenant pool in the Bay Area is generally better than fly over states?  Do you think there's less wear and tear on your property here compare to fly over states?  I've flown to several states to check out potential investment properties and came away with valuable lessons.  All I can say is I'm so glad I decided to invest at home.  It's crystal clear now why Bay Area real estate is expensive.  

Everything in life has a price.  The rich vote with their checkbook.  Let's take a look at where the VCs invest their money.  25.3% of GLOBAL investments go to the Silicon Valley.  Boston is the next distant 2nd at 7.5% followed by NY at 5%, LA at 3.4%......Beijing came in at 9th place at 1.8%, and Seattle came in at 10th place at 1.7%.  Vancouver didn't make the top 20, but real estate there is still insanely expensive.  :>)

What are you trying to accomplish?  Multi-generational wealth or cash flow so you can get off the rat race?  Do you want to invest where you can get a "perceived" stable 10% cash on cash return (CoCR) now and for the next 10 years, or are you okay with no cash flow now, but getting 10% CoCR in year 5 and 20% in year 10? 

If history is any indication, owning real estate in the Bay Area has a high probability of building multi-generational wealth and generating massive cash-flow in the later years.  Are you a short- or long-term investor?  How's your investment time horizon?  If you want cash-flow right off the bat, it's a little tough to do it here UNLESS YOU CAN DEVELOP A NICHE OR YOU'RE PART OF THE CLUB.  :>)

I sold my first buy-and-hold duplex in Dec 2015, and I'm kind of regretting it.  I paid $70k in estimated taxes.  Should have done a cash-out refinance and kept it instead.  Live and learn.