Jordan and his wife own three properties and are under contract on a new house since they have a new baby on the way. Should he sell any of his existing properties to be in a stronger cash position, thus mitigating the risk of future fluctuations in his income as a real estate broker? Or should he keep his rental properties since his goal is to reach financial independence through rental income?
Laura wants to purchase her first investment property in Miami. Should she cash out some RSUs and stock from her company to use as a down payment? And what type of mortgage is she eligible for since she already owns a home?
Russell is a busy professional who’d like to invest passively in real estate. Is there data he can use to compare this approach to owning and managing their own properties?
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Jordan asks (at 3:07 minutes):
I live in West Georgia where I currently own three properties – one primary residence and two rentals. My wife and I are expecting our second child in February and we’re under contract on a $500,000 new construction home to accommodate our growing family.
I’m a real estate broker making $150,000 – $200,000 per year with no debt aside from my mortgages. I approach finances conservatively because my income fluctuates. With a baby on the way and concern about a potential downturn in the real estate market (and thus my income), I’m wondering what action I can take to put us in a secure position?
I don’t need to sell our primary residence to purchase this new home, but am considering it since I wouldn’t have to pay capital gains tax. We have $100,000-$150,000 in equity in it and would make $200,000 in cash if we sold it. Since we’re purchasing a new home in an inflated market, I’d like to wash out some of that by selling our current home.
For our rentals: we own a single family home that collects $875 in rent, and the monthly mortgage on it (including taxes and insurance) is $535. We collect $1,315 per month on the duplex we own, with a mortgage of $637. The only expenses we have are a combined $100/month in landscaping and $30/month in water. I could sell our rental properties, which would yield $100,000 after taxes and paying off the mortgages.
Should I sell the two rentals? It would take years to make the equivalent amount through collecting rent and debt payoff. Selling them would put me in a strong cash position and allow me to invest that money and pay my new mortgage with the earnings. I would also be able to purchase foreclosures when they start becoming available again — but this sounds like market timing.
Or should I continue to hold them since my goal is to eventually own five rentals that generate enough income to cover our living expenses?
Laura asks (at 31:06 minutes):
I live in Texas and want to start investing in real estate. Due to rising prices here, I’m interested in purchasing a condo in Miami. It’s cheaper and easier to acquire. The condo would be in an HOA and I would like to live there part time.
What do you think about the Miami market?
I have some RSUs and stocks from my company. Should I cash some of those out to use them as a down payment?
Since I already own a home in Texas, what type of mortgage is best in this situation?
Russell asks (at 47:55 minutes):
I’m a busy professional interested in real estate investing. I’d prefer to invest passively in syndications and crowdfunding platforms, rather than owning and managing my own properties. If I do this, will I sacrifice any significant returns?
I understand that returns depend upon the specifics of the properties, deals, and operators. Is there data that indicates consistent trends in each of these different approaches and allows me to compare the two?
Resources Mentioned:
- Joe On Money | Joe Saul-Sehy’s Twitter
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