All Forum Posts by: Tyler Richmond

@Drew Sygit If we move to wherever my wife lands a job then we will be at the mercy of that market. Denver, Portland, Austin, all pretty expensive places. If we decide to go all in with REI and just move wherever we want, then I am looking at properties around 250k and under. At say 250k, that's a 50k down payment at 20% and we could snatch up say 4 of those if they penciled out and still have a lot of cushion left in the bank.

It's really great to see everyone's varying opinions but so far it looks like the people that live in this Southern CA market are advising to hold this property and leverage it, whereas many from out of state are leaning towards sell and get the heck out of CA. I think the main factor here is that in order to access the equity in this house without selling, it would be via a HELOC. In order to qualify for that we are going to have to be making enough income for the ratio to make sense to the bank. This is where it gets tough because right now we would qualify for a very small fraction of the equity we have. So in a sense I feel like I'd be missing out on all of that locked up potential for investing until we step up our income a bit in say a year.

On top of all of that you still are paying interest on a HELOC which will make those cash flow calculations be a bit lesser than if we had the money outright. I sure could use a crystal ball...

Thank you everyone from providing some awesome input for me! I had no idea about some of these options such as home equity investments and NO DSCR loans until now.

I think the hardest part of this decision is the simple fact that we are fortunate own a house in San Diego. We aren't right by the beach by any means, but only a 25 minute or so drive away. What will this house be worth in 10, 20, 30 years? No clue, a lot more. There's this saying I hear constantly, something along the lines of "Once you leave, you can't come back", basically saying you will never be able to afford it again.

If we can truly take the cash from this place and multiply it at a far higher rate elsewhere, then it seems foolish to hold on to this one thing. My area does allow STR but this is East County San Diego. More so where families live and not exactly where tourists look to book a stay. I have been taking a good look at Mid Term rentals due to my close proximity to hospitals, but I am not confident enough in the cash flow that could consistently produce. If anyone has experience with MTR in San Diego, I'd love to chat about it.

At this point I'm really leaning towards selling. We have minimal baggage and could honestly move anywhere if we decide to ditch following my wives w2 job and go all in with real estate. Again, thanks everyone for taking the time to provide your input.

Thanks for the reply Andrew. You correct in that we do not want to live in California anymore. If my wife gets a job elsewhere, we will most definitely consider picking up and moving solely for that employment. On the flip side we are also willing to move wherever makes the most sense to dive fully into real estate investing. We would have the ability to make it both of our fulltime jobs by utilizing the potential funds from our home sale to house hack, BRRRR, or simply purchasing rentals with numbers that make sense.

I suppose we could keep the house for some positive cash flow and still get into real estate investing later on. The issue is that it would take us decades to save up the amount we'd get from selling. I didn't think about the aspect capital gains when this is not our primary residence. In that situation I would hope that the 1031 exchange still exists and we could put that towards a few different properties.

I apologize if this topic has been covered already. I have not seen anything that quite covers my questions entirely.

My wife and I currently own a home in San Diego with a 30yr fixed rate mortgage at 2.75%. Like many others my equity has increased significantly over the past few years. Given the fact that this is one of the most desirable cities to live in, I never thought it would be wise to sell, especially with our low interest rate and mortgage payment in comparison to rent cost. On the other hand, it seems as though cashing out the sizeable amount of equity we have would give us significant capital to start pursuing real estate investing in a less expensive market. I have run the numbers and if we were to rent our house long term, we could be cash flowing roughly 1 to 1.5k/month with it being managed. Not bad, but that's all our eggs in one basket here.

We have wanted to leave California for some time now, so the thought is we could sell now and capitalize on the last little stretch of these inflated prices. If we keep this house and rent it out, I don't see how we would be able to access the equity we have accumulated and use it to start making more money. I currently own my own restaurant that unfortunately opened right as the pandemic hit. As you can imagine it has been a struggle to take home much, so from a DTI perspective we would not qualify for a HELOC anytime soon. A cash out refi makes no sense given the difference in today's rates either. My wife may get a job offer out of state, in which we would relocate wherever that is, but I still do not think our DTI would allow us to access the majority of the equity in our place.

The final piece to this puzzle is that our home sits on a flat usable 1/3 acre. With the new laws passed in CA we would eventually be able to put and ADU on our property and also potentially convert our two-car garage into a JADU to up that cash flow significantly. Obviously, cost would be a factor, we do not have the funds to do this right now, but in time it is an option.

It seems like if we cashed out and moved to a market we like and had no jobs, then we could still qualify for a property with a DSCR loan if the number made sense. The other thought is purchasing something all cash relatively cheap that needs some work and doing a BRRRR. Ideally, we would want to house hack right out of the gate with a duplex or triplex, but again, we won't have the funds to do this unless we sold our house.

I hope this makes sense. Any help would be greatly appreciated. Our biggest fear is that once we sell this place it's obviously gone forever. Given it is in San Diego and we have such a killer interest rate, I'd hate to look back and think that this was a short-term bad decision. I also am ready to dive fully into REI and having the capital to start purchasing as many cash flowing properties as I can seems to make more sense than holding onto just one property.

Cheers,

Tyler