How much yield to expect?

Question

I have  a chance to sell a  house and am comparing my options which are:

Keep the property for four years  and benefit from cash flow and potential appreciation, or

sell the property and invest the money in notes or other property to yield approximately the same  return I would have gotten by not selling. According to my rudimentary math, I would need to earn about 21%  compounded annually, to gain the same dollars by keeping.

My question:  How difficult would it be to find investments to earn 21%?

The easier option might be to try to sell the property for more. If I got 100K more on the selling price, I'd only have to earn about 10% on the sales proceeds to equal my gain of not selling.

Thanks for any feedback/advice!

Boyd McClean · Answer

Rule of 72 says you would double your money in 3.43 yrs. with your present situation. Why change? Also you have tax consequences which will effect your 21% unless in a qualified plan.

Not knowing your tax situation, if in qualified plan or just how you arrived at $21% compunded annually, it is hard to tell. Who owns the note now?

You could do a JV, if mortgage with bank have an investor pay off your loan, have them give you a new mortgage, pull out some of your equity and buy notes that will give you 18-21% and now you have 2 streams of income. There are some creative things you could do tax wise with your situation.

Look at the tax consequences of buying a note using your money versus borrowing the money.

You are looking only at return rather than taking into consideration velocity of money.