Do I hold or sell?
I bought up 2 to 4 unit decrepit apartment buildings back when interest rates were high and prices were cheap. I made a decision to stop buying in 2003 and selling my next project (empty lot I got on tax sale) to pay down debt. The real estate market was out of control, with sale prices greatly exceeding the rent equivalent value. I expected to start buying again after the 2007 crash, but prices went back up again. I see 'investors' buying up properties with FHA loans (>5% down, very low interest rates) by pretending to live in the properties. Also, a Australian pension fund has been buying up properties via a real estate management and development company.
I think this area is again in a bubble. It is an easy commute to NYC, but frankly, the area isn't beautiful and never will be. The housing stock is ugly and the new construction isn't much better (really bad zoning ordinances encourage crap construction). The area has gentrified, so I don't think the dirt cheap prices will ever come back (I paid, adjusted for inflation, about $125k for my first 2 family home). I have new construction condos down the block from me on the market for $450k for a 1 bedroom.. which I just think is not sustainable when interests rates move up again.
My original plan was to hold onto my 4 remaining properties (I live in one) until I reach my early 60s, at which point they will be fully paid off. I am wondering if I sell now, I may make more money than I would 15 years from now (minus the one I live in). I have kids on the way, so I wanted the option of leaving the properties for them. I must admit I also have an emotional attachment to having the properties. I spent many night and weekends busting my ass renovating them on a shoe string budget. My own blood and sweat is embedded in the walls.
The three properties in question are all cash flow positive (excluding major capital improvements). I am leveraged under 50% based on a very conservative property value estimate. The properties were all extensively renovated in the late '90s to early '00s. I can upgrade the apartments further to make them "owner advantaged" (granite counter tops, premium appliance, upgraded floors).
Do I hold or cash out? I conservative estimate after paying off debt and paying for improvements I would cash out about $700k (before taxes).
I bought up 2 to 4 unit decrepit apartment buildings back when interest rates were high and prices were cheap. I made a decision to stop buying in 2003 and selling my next project (empty lot I got on tax sale) to pay down debt. The real estate market was out of control, with sale prices greatly exceeding the rent equivalent value. I expected to start buying again after the 2007 crash, but prices went back up again. I see 'investors' buying up properties with FHA loans (>5% down, very low interest rates) by pretending to live in the properties. Also, a Australian pension fund has been buying up properties via a real estate management and development company.
I think this area is again in a bubble. It is an easy commute to NYC, but frankly, the area isn't beautiful and never will be. The housing stock is ugly and the new construction isn't much better (really bad zoning ordinances encourage crap construction). The area has gentrified, so I don't think the dirt cheap prices will ever come back (I paid, adjusted for inflation, about $125k for my first 2 family home). I have new construction condos down the block from me on the market for $450k for a 1 bedroom.. which I just think is not sustainable when interests rates move up again.
My original plan was to hold onto my 4 remaining properties (I live in one) until I reach my early 60s, at which point they will be fully paid off. I am wondering if I sell now, I may make more money than I would 15 years from now (minus the one I live in). I have kids on the way, so I wanted the option of leaving the properties for them. I must admit I also have an emotional attachment to having the properties. I spent many night and weekends busting my ass renovating them on a shoe string budget. My own blood and sweat is embedded in the walls.
The three properties in question are all cash flow positive (excluding major capital improvements). I am leveraged under 50% based on a very conservative property value estimate. The properties were all extensively renovated in the late '90s to early '00s. I can upgrade the apartments further to make them "owner advantaged" (granite counter tops, premium appliance, upgraded floors).
Do I hold or cash out? I conservative estimate after paying off debt and paying for improvements I would cash out about $700k (before taxes).