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We have a rental property in another state. This was our former home and the house was built in 2011, but we unexpectedly moved to NY due to my job so we rented it out. We receive good rent on this property... After PITI, we net about $1000 to $1,100 on positive cashflow per month. This is in addition to the tenants adding about $1,000 a month to our equiity on the house. So if you ask me, it is a good investment and we should keep it.
Now, for the first time we had a financial advisor (fee based and independent), and she was of th opinion - STRONG OPINION - that we should sell it and invest the money in mutual funds for retirement.
So you can give me your respectful and unbiased opinion, here are more details: we are already saving for retirement via 401(k)s, IRAs, etc... This rental's positive cashflow goes to help retirement savings as well. The house has gone up in value around $300k... I dont expect it to continue going up at the same pace, but we have a fair amount of equity, which may continue to go up as home prices continue going up, even if at a slower pace, the equity itself going up by contributuons from the tenants, and the positive cashflow which helps our savings.
I also have a healthy skepticism based on my experience in the stock market in the last 8 yrs. My money is relatively flat, so i dont feel any "miracle of compuonding growth".
Last - bc this house was our primary residence, we can still sell it and pocket the earnings w/o having to pay taxes... However after 2017 if we sell it we will need to pay taxes on the gains bc it will be considered an investment property.
I hope this gives a good overview. I say "hell I'm not selling", but hubby is starting to reconsider. Thoughts???
We have a rental property in another state. This was our former home and the house was built in 2011, but we unexpectedly moved to NY due to my job so we rented it out. We receive good rent on this property... After PITI, we net about $1000 to $1,100 on positive cashflow per month. This is in addition to the tenants adding about $1,000 a month to our equiity on the house. So if you ask me, it is a good investment and we should keep it.
Now, for the first time we had a financial advisor (fee based and independent), and she was of th opinion - STRONG OPINION - that we should sell it and invest the money in mutual funds for retirement.
So you can give me your respectful and unbiased opinion, here are more details: we are already saving for retirement via 401(k)s, IRAs, etc... This rental's positive cashflow goes to help retirement savings as well. The house has gone up in value around $300k... I dont expect it to continue going up at the same pace, but we have a fair amount of equity, which may continue to go up as home prices continue going up, even if at a slower pace, the equity itself going up by contributuons from the tenants, and the positive cashflow which helps our savings.
I also have a healthy skepticism based on my experience in the stock market in the last 8 yrs. My money is relatively flat, so i dont feel any "miracle of compuonding growth".
Last - bc this house was our primary residence, we can still sell it and pocket the earnings w/o having to pay taxes... However after 2017 if we sell it we will need to pay taxes on the gains bc it will be considered an investment property.
I hope this gives a good overview. I say "hell I'm not selling", but hubby is starting to reconsider. Thoughts???
Well, the big question is indeed whether it will keep going up in value quickly or whether it will stagnate. This depends on both local and national factors. What is happening to the area right now?
I keep it. The best advice I've got from my sister's friend is to keep all the real estate you have purchased. It takes time an effort but eventually it will be worth it. This guy has 19 properties in California and he is a real estate person.
I keep it. The best advice I've got from my sister's friend is to keep all the real estate you have purchased. It takes time an effort but eventually it will be worth it. This guy has 19 properties in California and he is a real estate person.
Real estate is not always a winning proposition. If you bought in urban California some time ago, though, you did indeed strike it big!
Would the financial advisor have an ulterior motive in steering you toward mutual fund/stock investments?
Keep it. And be sure to set some money aside monthly for a repair and maintenance fund for the place. Tell the advisor that you already are putting the rental income into retirement savings/investments, and that's plenty for your needs. If she keeps pushing, consider getting a different financial advisor.
Real estate is not always a winning proposition. If you bought in urban California some time ago, though, you did indeed strike it big!
I bought at the most expensive areas and mostly areas with good school district in California. Real estate is all about location.
I slept well when the market crash, when we had bank run. I would never sell and invest in the stock market. It's like a bond for me.
Its in a great location in Houston, with some of the best inner city schools, close to everything. Now Houston had a boom but the last year or two have been tougher due to the low oil prices and associated industry layoffs.
Risk factors are that our tenants are really good now, but who knows what the future will bring... Bad tenants, lower rents? I think even if the city is going through a slowdown, it still has other booming industries like healthcare, and lts of people moving to TX due to lower COL (relative) and no state income tax.
We have a rental property in another state. This was our former home and the house was built in 2011, but we unexpectedly moved to NY due to my job so we rented it out. We receive good rent on this property... After PITI, we net about $1000 to $1,100 on positive cashflow per month. This is in addition to the tenants adding about $1,000 a month to our equiity on the house. So if you ask me, it is a good investment and we should keep it.
Now, for the first time we had a financial advisor (fee based and independent), and she was of th opinion - STRONG OPINION - that we should sell it and invest the money in mutual funds for retirement.
So you can give me your respectful and unbiased opinion, here are more details: we are already saving for retirement via 401(k)s, IRAs, etc... This rental's positive cashflow goes to help retirement savings as well. The house has gone up in value around $300k... I dont expect it to continue going up at the same pace, but we have a fair amount of equity, which may continue to go up as home prices continue going up, even if at a slower pace, the equity itself going up by contributuons from the tenants, and the positive cashflow which helps our savings.
I also have a healthy skepticism based on my experience in the stock market in the last 8 yrs. My money is relatively flat, so i dont feel any "miracle of compuonding growth".
Last - bc this house was our primary residence, we can still sell it and pocket the earnings w/o having to pay taxes... However after 2017 if we sell it we will need to pay taxes on the gains bc it will be considered an investment property.
I hope this gives a good overview. I say "hell I'm not selling", but hubby is starting to reconsider. Thoughts???
This certainly could be a reason to sell it. What part of Houston is it in?
Are they good tenants, who aren't likely to trash the place, and likely to stick around?
If I'm interpreting what you said correctly, when the place is paid off, you can pocket around $2,100 in rent per month? I'd be looking to buy another comparable place, not sell the one you've got!
Sheesh, with that much coming in, I could give up on full time work altogether, and maybe even on all forms of employment, if I was stingy enough.
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