I’m 33, and I’m sort of stuck with what to do. Maybe someone has some ideas.
I own two free and clear rentals currently cash flowing $3400mo, combined market value ~$520k.
We don’t have a ton invested, $18k roughly. Wondering if selling them, and investing, would make a better long term income? Not looking for advice, just ideas. Maybe something else I hadn’t thought of.
Sell rentals and invest in market?
byu/FrogginSzn ininvesting
Posted by FrogginSzn
9 Comments
Uh yes
Do a cap rate and compare it to stock returns, first of all.
You could be earning 5% with a very conservative investment portfolio that doesn’t need a plumber.
Can you just use the monthly money you’re getting from the rentals and invest that? It’s hard to get real estate properties to cash flow. I’d hang on to those unless they become a pain to manage.
If you inherited $500k would you buy these properties? Look at my recent comments for an equity I pitch to morons that would prefer to ‘own’ (rent from gov-) sticks/dirt lol
If somebody gave me $520k, would I put it all in small rentals that cash flow 3400 a month?
No
I don’t think that’s a great rate of return. I don’t think that’s very diverse and thus has mitigatable risks compared to other strategies. I don’t think that’s taking advantage of the current market – given that the COVID era housing prices basically front loaded a decade of gains.
Split the difference. Sell one property and invest the money. Real estate is a different kind of investment and you now understand how to manage, I would think. With stocks, you are somewhat exposed to it, but not as much as real estate. So, with the proceeds, invest slowly over time.
What type of properties are they, the cash flow is solid for that value.
What’s the area like and look at appreciation rates in the area over the last 10-20 years.
Do you have another job? What’s that income?
Do you mind being a landlord? For me it’s nice to have something to do, I have a few clear properties just to give me something to do with my day every now and then
A 7.8% return on rental is not bad. At all. If you can keep this going and it’s a relatively stress free rental, I’d say keep it going and funnel cash from that into investments into equities. Key being easy stress free properties and a constant approx 8% return year over year? Not bad at all. If not, yeah I’d choose the market over rental properties
Much of it depends on your renters, are they consistent and 1+year, and then the properties.
There’s also a huge accounting variable; have you been deducting losses, expenses, and depreciation?
Then there’s the idea that 2 properties are easy and cheap to leverage; ie, yours are paid off, so if you were to mortgage them, you have 600k that either purchases 3 more properties or you can invest in the stock market. (Your renters are paying the interest)