Weekly Austin Real Estate Investor Update 1.22.18 – Is 2018 the time to sell my austin rental property?

January 23, 2018 Uncategorized

 

This week we’re going to talk about selling your rental home in 2018. We’re getting an number of emails on the topic from our investors.

Key points to consider:

Rules of Investing:

  • Don’t dispose of an asset that’s producing a great rate or return.
  • If your rate of return on your asset is higher than that of something you ‘want’ to buy (not need), it’s smarter to keep the asset and finance the purchase. Remember it’s a want not a need anyway thus you may not want that new boat in two years but you’ll be happy you’re making a 20% rate of return in that time on this investment.
  • Real estate investing as well as saving for your future and retirement is a long term game. You’re planning for retirement, not for a bigger home or a bigger boat. You wouldn’t cash out your 401K to buy a bigger home or fancier car and that’s probably only producing about a 5-10% rate of return. Why would you cash out and pay about $20,000 in fees and then taxes on what’s left if your rental is producing a 20% rate of return. This is what we’re finding most of our clients are getting. We’re happy to run a free analysis for you. Be patient and keep your eyes on the prize of retirement or a safer more secure future with another source of income.
  • If you have short term problems don’t attempt to fix them with long term investments.

Still think it’s time to kill the dairy cow? OK let’s find let the numbers decide.

  • What is your current rate of return?
  • What is your current situation? If you’re retiring this could be your future source of income. If you’re not at that point it’s probably not time to sell.
  • Remember that cash is only one of four ways you’re making a return on this investment. You’re not looking at cash monthly from your 401K. This is the same concept. You may or may not be making cash however you’re paying down the mortgage (building equity), gaining from appreciation (typically 3.1% annually on the total value of the home in Austin), and you’re gaining tax advantages such as write offs and depreciation. If you’re only counting cash you’re missing out on the other 75% of the equation.
  • Don’t forget it’s going to cost you about 8% of the value of the home to sell it. On a $250,000 home in Austin that’s about $20,000 just to sell it and this doesn’t include make ready costs or seller concessions for items found in need of repair during an inspection.
  • Next you might get the joy of paying taxes on the money you received. This is about the same as if you pulled money out of your 401K. Who wants to pay more taxes?

Still convinced it’s time to sell?

  • If you’d like a free estimate we’re happy to run one for you. Email your property manager or reach out to us online and we’ll run the numbers and share those with you. You can decide if you want a bigger home today when you can finance that purchase at only a 4.5% interest rate or a retirement in the future when you’re making 20% on your current investment.

To run your analys a copy of a recent mortgage statement would be very helpful plus the following:

  • Year/month property was purchased
  • Purchase or full sales price
  • Down payment in $
  • Original mortgage loan amount
  • Monthly mortgage
  • Mortgage term (typically 15 or 30 years)
  • Mortgage interest rate
  • Insurance (monthly)
  • HOA Dues (monthly)

We want to be your real estate consultant not just someone who collects the rents and repairs the toilets.

Don’t forget that if you’re one of our property management clients we can use your numbers over time and review them annually at no charge. Once we have this basic information on file we’ll be able to ensure accuracy over time and monitor the progress of your investment.

 

Reach out to us today if you’d like to become a client of 1836 Property Management or if you’d like a free analysis of your Austin real estate investment.
www.1836propertymanagement.com or 512-994-4323