Sell Connecticut multi or Florida Air Bnb
Hey y’all my name is Dave and I’ve been a follower of bigger pockets for sometime. I have 5 flips and 2 buy and hold properties under my belt. I have no cash at the moment and want to liquidate to do another flip, should I sell Fairfield County CT 3 family, or 2 bedroom 1 bath with a pool in Hollywood, FL? I have about 150k equity in the CT home and it brings in around 1500/mo after piti and expenses (2% interest rate, owe 400k). My Florida home has about 330k equity and currently makes about 500/mo after expenses (3% interest rate, owe 250k). I may be able to get the Florida home to 1500/mo or so if I rent it as an Airbnb (currently mo to mo $3,300, has a fenced pool, 7 min from the beach), and I’m emotionally tied to the Florida home as I bought the home for my mother who sadly passed away in it from cancer last year. It has so far double in appreciation from the CT home in about the same amount of time.
I feel on paper I should sell the Florida home, and the only thing logically I can come up with to keep it is the faster appreciation of a south florida home vs a Fairfield county home in CT. They are around the same price at the moment. My income/credit is too low to tap any equity in the Florida home via heloc. I will be hard money flipping as soon as I sell one of the homes.
Do any of y’all have any experience or insight between the two markets, and what would you do? I could also keep both and just not flip for 2-3 years while I save money from my job. My ultimate goal is to get into brrrring in a state that is conducive for it Please let me know what y’all think, and thank you!
Dave
Dave,
As a Banker my advice would be refinance the home in Florida and take out some cash. You mentioned that the credit is not perfect so the first step would be to increase the scores. There are several ways to increase credit scores even with debts or collections. Bankers and Loan officers have tools and experience on helping borrowers improve credit at no cost.
If you can get your scores up to 680+ you can get a decent rate to pull cash out and use that to buy more rental properties. You do have a low rate on both homes but do not let the rates control your future income. A rate can be refinanced in the future and lower rates will come back in the next 12-24 months.
I would also set the Florida home up as an STR, I am in Pinellas County and Hollywood is a great place to both STR & LTR. My next question would be do you own a primary residence and if so do you have equity in the primary. You can pull cash out of a primary at a lower interest rate and with a lower credit score versus a NOO investment rental.
You are in a "Great" position the only thing holding you back that I see is possible credit scores. You may be surprised and it may not be as bad as you think so it may be worth it to review all 3 bureaus. Once you have a full report you can run a few simulators like "rapid rescore", "Wayfinder" or "Credit Wizard" these are all tools most banks and lenders use to help a borrower see what can be paid down or off to get a specific score.
You also have options to inquire about "Pay for delete" collections and check you statute of limitations on collections based on the state. There are also demand letters that can be written for proof of debts which if written properly give the debtor and bureau a certain number od days to respond/proof or they get deleted.
Quote from @David Ahearn:
Hey y’all my name is Dave and I’ve been a follower of bigger pockets for sometime. I have 5 flips and 2 buy and hold properties under my belt. I have no cash at the moment and want to liquidate to do another flip, should I sell Fairfield County CT 3 family, or 2 bedroom 1 bath with a pool in Hollywood, FL? I have about 150k equity in the CT home and it brings in around 1500/mo after piti and expenses (2% interest rate, owe 400k). My Florida home has about 330k equity and currently makes about 500/mo after expenses (3% interest rate, owe 250k). I may be able to get the Florida home to 1500/mo or so if I rent it as an Airbnb (currently mo to mo $3,300, has a fenced pool, 7 min from the beach), and I’m emotionally tied to the Florida home as I bought the home for my mother who sadly passed away in it from cancer last year. It has so far double in appreciation from the CT home in about the same amount of time.
I feel on paper I should sell the Florida home, and the only thing logically I can come up with to keep it is the faster appreciation of a south florida home vs a Fairfield county home in CT. They are around the same price at the moment. My income/credit is too low to tap any equity in the Florida home via heloc. I will be hard money flipping as soon as I sell one of the homes.
Do any of y’all have any experience or insight between the two markets, and what would you do? I could also keep both and just not flip for 2-3 years while I save money from my job. My ultimate goal is to get into brrrring in a state that is conducive for it Please let me know what y’all think, and thank you!
Dave
Both of your properties are doing ok in terms of cashflow, I would learn towards making the Hollywood Florida home into a STR to improve the cashflow every month. I am an investor here in south FL (mainly Broward county) and I expect further appreciation for SFH and small MF homes. I'd aim on fixing up your credit score and then pulling money out of your primary home if possible.
Hey David, congrats on the big moves so far!
Are you hoping to do another flip so you can acquire the cash to purchase more buy and hold? If so, you may be able to fastforward a bit and retain the equity in these properties.
It might be worthwhile to explore a DSCR loan which doesn't require income verification / DTI and usually comes at a rate only slightly higher than conventional. Basically, the loan qualifies the property's ability to cashflow rather than the borrower's personal income.
We're a licensed broker/lender in both FL and CT if you want to explore alternate financial pathways vs. refi and flips to acquire more properties.
Best of luck!
That being said, I agree with everyone else that has posted that you should do what you can to keep them both. They are both cash flowing and selling now would likely set you back a few years. You should talk to a few more bankers about getting a commercial line of credit on either home. If you can show them you are cash flowing well - that, along with the equity should be enough to get you that loan right now. Rates are a different story, though.
