Need Opinions - Posted by Laure

Posted by karp on November 06, 1998 at 09:58:58:

Yes, sell it but don’t owner finance this one.
You need the cash to leverage into something that will return a heck of a lot better on your money if you are serious about this game…


aka Karl Hartley

Need Opinions - Posted by Laure

Posted by Laure on November 06, 1998 at 05:41:42:

Ok, almost all of my real estate experience has been with holding property and renting it. Now comes the question… I have a 3 br, finished bsmt, no garage, no central air. About 20 years old. I just re-did the kitchen last year, and it has all new carpet. House is real clean. Tenants want to buy. Current situation: I bought it for 18,500 in 1988. It is paid for. I have free title to the home. It would appraise for 60-65k now. I am currently getting 650/mo. Taxes are 1200/yr, there is a new roof coming. I figure that is only about 10% return on the money (without appreciation) The tenant called last night and wants to buy it. They have no downpayment. They net 2300/mo with a 350 car payment. Just had second child (born last week) She is a teacher :slight_smile:

Should I sell and leverage for more real estate? I am 39 years old and have 18 rental homes now. Opinions…

Re: Need Opinions - Posted by Bud Branstetter

Posted by Bud Branstetter on November 06, 1998 at 13:18:25:

One alternative would be to refi the property at 85% yourself to pull
cash out. Advantage of this is no capital gains hit. Disadvantage is
you are on the note. The disadvantage of being a landlord can be overcome
by selling to them on a contract. This would make it an installment
sale. Make the note due in a couple years and have them refi to pay
you off. A similar effect would be achieved if you L/O to them. The
advantage there is that you could recieve notice of them buying and
be able to do a 1031 exchange to avoid the taxes.

Another alternative is to sell to them. If you get with a good mortgage
broker he will have programs that you gift them equity to take care
of no down payment. Depending on their credit the lender may want you
to carry a 2nd. The disadvantage is you could get hit with capital
gains. Again you can solve that with a 1031 exchange.

What you should do will depend on your goals. If you are wanting to
expand your empire cash is handy to acquire bargins. The advantage
of selling in todays market is the low interest rates and reasonablely
good prices. You may at some point get tired of being a landlord. You
are also at the point that thoughts should turn to asset protection
and estate planning. A corporation could help with deductions and allow
a pension plan to put your profits into.