Why I’m Selling My 4% Interest Rate Rental Properties
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- Опубликовано: 4 авг 2024
- Calculate whether you should keep, refi, or sell in MINUTES with Property Llama: go.propertyllama.com/bp/
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Even if you have low interest rates and plenty of cash flow from your rental properties, it might be time to sell. Giving up that low rate could unlock even better returns and more cash flow than you thought. But when should you sell a high-performing rental property? Chris Lopez is back with another “Keep, Refi, or Sell” episode as he shares why he’s strongly debating selling two of his highest-performing rentals to passively invest in an even better investment.
Everyone has been telling you how hard it is to find cash-flowing rentals in 2024. However, Chris has some investment options that bring in double-digit returns without having to deal with the tenants and toilets. If you’re at the stage of life where you want to dedicate more time to your family or interests while still growing your real estate portfolio, Chris’s plan may be one worth imitating.
00:00 Sell Your Low Rate Rentals?
01:57 This is CRUCIAL for Wealth
04:16 Sponsor: Property Llama!
5:05 Option 1. Keep the Properties
07:21 Option 2. Raise Rents and Refinance
08:15 Option 3. 1031 Exchange and Buy Rentals
11:42 Option 4. Sell and Invest Passively
15:54 Which One to Choose
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I like how you show the different options and get us thinking about all our options instead of what we've been told over and over. Thank you
You’re welcome!
It will be a Cold day in hell i invest in a condo and me selling my 2.875 ain't happening
That’s great you know your plan! It all comes down to personal risk tolerance, goals and strategy
Thank you for providing such practical advice on balancing cash flow with growth strategies. Your insights into the trade-offs between rent increases and passive investments were invaluable.
You’re welcome! I just learn from people who are smarter and more successful!
What is the development fund in Denver you mentioned?
I just did a 1031x from SFH to a commercial prop. Nothing cash flows in Denver unless you buy down the equity. Stacking paper is the key tell you find a commercial property in need of capital. Room by room is only if you are younger than 25. Airbnb is a hospitality business not passive income. Be patient stack cash I might even buy residential seasonality/ buy in winter and sell in spring
Selling our home right now. It has a 3.25% obtained in 2013. Why? We moved into a 3 family with a 7% interest rate, and the tenants cover the mortgage and then some.
Yep. We're about to do that too. Offload all the clutter we've accumulated over the years, get a hefty mortgage loan off our credit report, and be ready to pounce on what's probably our final primary residence. No rush, no hurry.
Interesting stuff. I should start thinking about advanced stuff like this with my portfolio. I like your scenario 4! I think l’m
doing to much work I think I’m going to continue as I am and in a couple years relook things over. I just got my first rent by the room property and I’m loving it and want to expand on it for a bit.
Who wants to live an house like that?
@@luciusgorgo14 At first I thought the same thing until I starting my first trial on renting rooms. Who rents rooms? Travel nurses who now get paid crap wages that's who. Mine are keeping booked up by travel nurses! However, I give them more than just a room they get a floor in the house to themselves with a private bath and the each have their own washer and dryer. They ONLY share a kitchen and one of the 2 rooms in the house has a kitchenette in it so they really don't even have to share the kitchen. I make them more like units instead of just a bedroom. It's a great way to make extra money on a single family house and to boot the nurses save $500 to $600 a month so their happy as well!
@luciusgorgo14 people in high cost areas who don't feel like paying 2500 for a studio will rent by the room. I've done it. It's actually fun. And as a landlord the rent is better. Look up todd baldwin
Congrats on your rental! Room by room is a fantastic way for cash flow in today’s high rate market.
I would get rid of the condos. Find a quality rental and set it up to pay itself off with the intention of keeping it as a retirement income. That’s what I’m doing anyways. I know it’s not the highest return situation but it creates a nice amount of security.
That’s a great move! Neither of those condos are class A assets that I want to hold onto for the long term. Congrats on your portfolio move!
also getting ready to sell my colo spring rental. why ? I can't cash out refi without going negative cash flow to just get 70% of my trapped equity out.
I rather take the tax hit and do two flips thid year to recoup and stack paper as others suggested for the right commercial deal or keep flipping.
Love that play!
Are there any loopholes for making a conventional mortgage assumable like a FHA? I’m trying to sell my house as an assumable to a friend but my mortgage is conventional.
Not that I’m aware of. I’ve heard of people getting “creative”, but that’s a nice way of saying mortgage fraud
I would keep the real estate. The passive income strategy sounded complicated and more risky. I like to keep things simple.
Too late! I sold them. I like th passive play for simplicity and people with more experienced and skin in the game
@@BuildingWealthWithRealEstate hope it works out! I’ll still be keeping my units.
If i have 4 free and clear properties they net cash flow 2800 per month. What should I do?
It depends on your goals. 1) is that cash flow enough for you? 2) are they legacy properties you want to hold for the long term?
If no to either, consider selling one and trade up to a better property. You can trade one every few years
I would dump the condos
Great minds think alike! I did!
What if interest rate continue to increase?
Then they keep increasing. No matter what’s going on, there are always to make money in RE.
There’s a lot more to being a successful Investor then riding a once in a life time low rate drop
how do you calculate return on equity?
Total cashflow for year/ total equity
Isn't that more risky?
I don’t think so. I had 250000 with exposure in one complex and one HOA.
Now I haven’t invested across multiple markets, strategies and asset classes.
For clarity, I’ve really researched the sponsors and deals I’m investing in. It’s risky if you blindly invest
33% down payment? how do you even call yourself an investor at this point? why not just do 50% down payment ... SMH
1031 sucks though if you ever want to sell before you die... you seem to keep flipping, so your mindset will sell eventually
You can sell an asset and pay capital gains on that sale, or buy something cash and just live off the rent if you want a higher cash flow/income to live off. The can still gets kicked down the road until you die.
Lol Of course you want to sell that, it is borderline negative cash flow! You are making less than 5% CoC! The worst part is you knew it was going to be that bad when you bought it. If you had done any analysis at all. You are hurting your IRR every day that you own the property! That was a really bad investment.
Do you think there's ever situations where breaking even is okay? You can still hope for appreciation and you'll have cash flow once you pay off the loan right
What are you talking about? It cash flowed every year. Yep, “really bad investment “ for doubling my Money in 4 years
@@stevend481there are certain cases, but I would wait for loan pay down. Certain appreciation plays and development plays. Look at many RE investors portfolios and the majority got rich from appreciation, not cash flow
@@BuildingWealthWithRealEstate First, anybody who bought property in 2019 or 2020.. and then road the covid wave, made a lot of money on appreciation. But the cash flow is the worst part. What was phenomenal about that cash flow? If you had taken that 100k and purchased a six unit property for 400k, your appreciation would have gone through the roof, and your cash flow would have been substantially more. I'm just saying of course you want to sell those properties, the cash flow is very sad, the appreciation is going downhill, it was not a good investment. covid helped, but overall it was barely positive. Probably inflation beat it.
@@BuildingWealthWithRealEstate I guarantee it was barely cash flowing when you first bought it. If at all. Covid saved this investment. And it's dropping. And this “doubling your money” is only if you didn't pay any lawyer fees, title companies, commissions to brokers, etc when you sell. Condos and SFHs just are not good rental investments. I guess we are also assuming that during covid you didn't have any deadbeat tenants, no vacancy, etc.
Why?? Dudes getting 1.9k
25% down on both? you are not a true investor .. real investors do not put 25% down
??? 😂😂
@@BuildingWealthWithRealEstate Why would you put 25% down? The goal of investing is to use OPM, not your own money. 20%+ down payment is way too high
It’s an investment property man..
Tenants wouldn’t leave just because a 10% rent increase but ok
many would
@@nickc3856 yea ok
Your analysis is sorely lacking. So many holes in it that I simply won't bother taking the amount of time and typing to try and point them out.
Ok! But you’ll take the time to leave a comment like this? Enlighten me on why IRR is a poor analysis
@@BuildingWealthWithRealEstate I did not say IRR was a poor analysis. I said YOUR analysis overall was sorely lacking.