All Forum Posts by: Mike Savage

Quote from @Ashish Acharya:

@Mike Savage
If selling everything feels too costly, a staggered exit strategy (selling financing) could help reduce the tax impact.

You're at a key point with your real estate portfolio, considering market challenges and rising costs. One option is to refinance to improve cash flow while holding on to the properties and benefiting from long-term appreciation. You could also consider selling one property, like the condo, to reduce management burdens and free up capital for reinvestment or debt reduction. Exploring more landlord-friendly markets or outsourcing to a property manager could ease your load.

ok. thank you all for your response. some additional details below.  we have a primary fixed loan plus an adjustable heloc. I anticipate rent $3000/month. our advisor suggests selling one of our 3 rentals to pay off high interest adjustable debt which will free up cash flow due to our high interest adjustable HELOCs  he also thinks it may be ok to sell even if we pay capital gains which I mentioned before estimated transaction costs close to $150k OUCH> which would leave us with a approx net of $350k. Advisor has calculated we are currently only getting low single digit yield due to high taxes, adjustable rates and we will need a roof in 2-5 years.  House is approx 1300 sq. ft.Note that we've owned the property for 24 years and we lived in the house for the first 4 years. My legacy plan has been to leave all rental property to heir after death so they can take advantage of step up in cost basis. just not sure we can or want to deal with the headaches for what we hope is another 30 yrs. above ground!  FWIW i manage our 3 rentals plus our primary myself and i'm average skill.

property 01

CONVENTIONAL MORTGAGE

5.375 fixed

original loan amount $ 173,750.00

monthly payment $ 972.95

balance $ 76,047.67

maturity date APR. 2041

estimated equity $ 509,380.61

estimated maximum sale price$ 615,000.00

prop taxes $ 6,741.79

purchased feb. 2004 refinanced MAR. 2011

property 01 Portland Oregon

HELOC

current rate  8.5

original 4.0

original amount $ 40,000.00

payment $ 211.75

balance $ 29,571.72

maturity  SEP. 2034

@Greg Scott

Thx for your quick response. We trust our accountant 1000% for past 27 years. we have in fact spoken many times about step up and that has been my strategy for building generational wealth. I think its terrific but here are some additional details. Our advisor thinks we should exit soon as we have some major cap ex costs coming up. (New roof, paint, etc) and proceeds even if we paid capital gains taxes could pay down other

properties debt including adjustable HELOCS which would double our annual income but of course we would lose a door. 1 property is currently vacant and I anticipate at least $10k to refresh including new gutters. New interior paint. New carpet and assorted repairs.

we are hoping to spend more time in Asia the next two years and i am not impressed w PM here due to high costs and low quality considerations. Also we are aging and not feeling great physically working on houses. We would love more passive housing like a multi or part ownership but seems everyone is looking for those type of investments. Maybe we can find a mentor or local agent who specializes in our scenario.

@Nick Sansivero

Terrific question and timely for us. We have been considering selling our recently vacant first owned home that has been a rental for 20 years. Our good friends have a wonderful primary w an exceptional ADU on it. Here are some numbers. Our first property purchased February 2000 for $195k likely worth $575k.

Our Friends house w ADU worth approximately 1.8mil however the exceptional ADU was built by best builder in region for $300k and would cost $500k to build today. We have been considering selling our primary after living here 18 years and just thought what if we sold our primary and 1031 our rental into our friends house at the same time we sell our primary? We love their home and could travel while having income from either the main property or ADU meaning we could move into the ADU while away for extended time.

So after a recent call w our amazing accountant he said something that hit me hard. he said after 40 years w his clients he's observed that its easy to get into real estate investing and much harder to exit real estate investing. In our case i'm very concerned w high transaction costs if we sell. for our smallest property he did some quick calculations and came up with approx. $150k hit on a $550k sale price. Currently We own 3 doors. 2 SFH plus a condo all in Multnomah County. We have been debating selling or holding on to them for years. All 3 properties are cash flowing at a low single digit rate but have nice appreciation and 10 years left on loan. I manage all properties myself plus I'm HOA president at the 5 unit condo. Some situational pressures are a somewhat wobbly rental market due to economic conditions (Nike/Intel layoffs). we've had some vacancies in the past few years. that never happened in 20 years of renting. rent prices have not been keeping up with increase in property taxes which diminishes our cash flow. Tenant laws making it much more complicated to be a property owner in Multnomah county. I Would love to hear what others are thinking these days. Looking for an intelligent strategy for moving forward. Feeling a bit stuck.

awesome advice!  thanks for the heads up.  I am on it.  Looks like you have experience in tenant screening.  Do you have any templates that you share??

So our tenant gave notice yesterday.  I'm Not surprised or concerned yet.  They want a dog and we have no pet policy in place.  I just re-listed the house for lease but was thinking about how we are going to show it to prospective tenants with the Covid virus reality.  Has anyone been using virtual tours to view properties and what platform might have the best results?  I will post listing to Zillow/Trulia/Hotpads soon and wonder if they have that feature yet.  Our 4bd 2.5 ba property will be available for lease June 30th.

hi all. So I got a tenant finally moved in mid December after a 5 month vacancy. We've never had more than a 2 week vacancy for the past 13 years! I also dropped the rent to $2990. Just trying to wrap my head around what is really going on in this market. I see tons of out of state license plate while i'm sitting in terrible traffic during mid day. This is a very desirable SFH with a view, great schools, ultra low crime area. etc. I find it hard to believe I was just shootin fish in a barrel all those years in the past but more importantly I want to learn from this lesson for my next vacancy or even to get the motivation to buy more properties. I definitely am on the sidelines now after this year. Listening to lots of Bigger pockets money podcast and asking what my investment goals are. Curious what other PNW members think of the market. LOTS OF CRANES AND new apartments going up.

So we have a 4 br 2.5 ba rental listed on Zillow (Hot Pads/Trulia).  I noticed it's "Zestimate" is $2700/mo. but we've been getting $3345 for the past 6 years.  Today I managed to send in a message to Zillow and will wait to hear back on Monday how they came up with their number.  However it's got me thinking about the risk/reward of their platform.  I wonder if the low Zestimate is turning off our potential candidates.  Any thoughts out there??

this would be a first for us.  i surely remember my college days!  but think that graduate students might have a tad bit more maturity than undergrads.  i might take an extra deposit and extra thorough pre lease walk thru w video documentation 

I mentioned that to the woman who toured with her dad.  They agreed unless one of the other students would be even better point of contact.