It’s refreshing to hear from Erion. You can tell he’s been in the trenches for years and talks from experience. This topic is not talked about often in Real Estate content spaces.
I personally keep my investment properties completely separate from my personal finances. I recommend finding another way to pay off your credit card debt and then never going back in it. What’s the point of having an investment if you just use it to pay down a bad decision to go into debt. Tackling the debt separately will hopefully help you make difference decisions in the future regarding your credit cards. I say this because I went through the same thing. Ultimately I kept my rentals and found other means to reach separate financial goals.
Great episode Chad! Erion is one of my favorite guests on your channel. The comment about "Don't sell just for the dopamine rush" really resonated with me. What I would love to see is a comparison of ROE in a mature real estate portfolio vs. an index fund. Paula Pant should be your guest. I like Paula because she has both Rental Properties and Index Funds. ... and you have a "Small and Mighty" portfolio. Let's compare these two types of investments. Stocks vs. Mature Rental Portfolio (maybe a rental with no debt). PS. John Schaub is my second favorite guest of yours. But Paula is great on air. Get her on your show!
Reason number one for selling - Too much equity. What would be the argument against a HELOC against that equity to buy another rental, vs selling and dealing with a 1031. Assume you have a property worth $500k, you owe $150k, and can take a HELOC at 80% LTV. Reason 1 is not return on equity, but what if you can pull that out, make more and avoid the headache/pressure of a 1031? Now you have 2 properties appreciating vs 1
Heloc is definitely an option if you don’t want to sell. The potential arguments against it would be: 1) high interest rate on the heloc 2) variable rate in a high volatility environment and 3) being able to only use a fraction of your equity.
🎉❤Love hearing two masterminds Coach and Erion. You may not know me but I have gathered lot of knowledge from you guys wisdom. Tbh I never thought of this aspect of selling your rental properties. Currently have 3 single family quality homes renting $2100-2200 range. 4th SFR coming up in June.
Do you have a strategy to invest cashflow into existing property build out for the purpose of 1. tax strategy; 2. expand rental portfolio; 3. increase equity. All of my properties allow more unit buildout - looking at buildout vs 1031.
I listed one of my rental properties for sale reason being..its appreciated in value...and i feel it has features that make it a more desirable home but at the same time a less desirable rental property,(( a huge yard,a water well,rural area))
Great episode, Coach! This is exactly what I needed as I navigate through market fluctuations. It seems like all the experts focus on starting out or the positive aspects of real estate investing, but none of them delve into the challenges or failures they faced on their investment journey. Many of us jumped in during or after Covid, and we're struggling with rising interest rates, increasing insurance costs, and more. It would be helpful to see more videos like this, providing hope that enduring the downsides leads to a light at the end of the tunnel. Thanks again for the insightful video, and I look forward to more content like this in the future!
Very good and insightful conversation, Coach Carson! I ponder this with my portfolio and think about the return on equity. I have some properties that are growing in equity faster than rental growth that I think about selling, but I start thinking about the continuing growth in the years to come and how its a savings account that will likly continue to grow so I usually talk myself out of selling even though the property is not a great cash flow in today's market.
@coachchadcarson, would you consider a property that has doubled in price from $260k to $520k in the past 7 years, but only cash flowing $200 per month a keeper? Class A neighborhood, but the lack of cash flow is nagging at me .
Coach, thank you for the video. While I don’t ever intend to sell any of my rental properties, it’s good to have this video as a resource in case I ever change my mind. One question does occur to me that I wish you would’ve asked, it is as follows: What if you have a good reason to sell (for example, the neighborhood is going downhill and the type of tenants you are attracting are subpar) but as you are preparing to sell, a bad reason rears its ugly head (market fluctuations arise causing a drop in home values). Which rationale should take precedence over the other? Should I wait it out and deal with a crumbling neighborhood and undesirable tenants? Or should I ditch the property as soon as possible to avoid the problems of a crumbling neighborhood and undesirable tenants and sell the property at a price that is less than desirable (possibly even a loss) because of the fluctuations in the marketplace? Perhaps you can reach out to your guest and ask him for his input on this?
I can share a story on that. I bought a number of properties in 2007 (right before the recession) that were not good long term rentals. I made mistakes on locations or paid bad prices. Some we sold right away to cash buyers when we could. Others we sold with owner financing. And still others we kept until the market turned around. Neighborhoods aren't like stocks that crash under your feet. They change slower. You have time. So, if you have a loser property I say try to sell asap. But if market conditions don't allow, most of the time be patient and be creative to get it sold. And in some cases, take a loss if you have a better opportunity to reinvest into
Great Question! Like Coach mentioned during the episode, the deterioration in the quality of location does not happen overnight. This is where you try to sell ahead of potential problems in the horizon. But if the current market environment is not favorable to sell where you would take a steep haircut on the sales price, then you can ride it out and hold on to the property until the conditions improve. The key idea is to sell only when it's advantageous to your long term plan.
I sold off a couple and paid off mortgages. But, with prices, current rents and increased value I think perhaps it wasn’t the way to go. Whatever, it’s working fine but I am thinking about selling my last two properties. I just can’t see where I can make the money I am making with my properties.
Hi Coach Is 1st lien HELOC available and allowed in Texas? I have 2 primary and 3 investment properties in Dallas TX. I would like to explore it for sure.
You execute a 1031 tax deferred exchange. Sell the property and the proceeds are transferred into a replacement property (or multiple properties) and you avoid paying capital gains taxes on the sale.
@@InvestingArchitect I always see people offer this as a solution, but it is *not* helpful for someone who is *not* looking to get another property. What would you say, for someone who just wants to get their cash without losing it all to taxes?
@@snatchinitback4635 you aren’t going to lose it all to taxes. It’s 15-20% so that’s certainly not all. It’s your basis less depreciation, less costs to sell and what is left is taxable.
It’s refreshing to hear from Erion. You can tell he’s been in the trenches for years and talks from experience. This topic is not talked about often in Real Estate content spaces.
That's why I enjoy talking with Erion. Hard earned wisdom is easily recognizable over newbies posing as experts.
I appreciate the return on equity exercise. He's right, I've always done return on cash, but return on equity paints a different picture. Thanks!
Glad it was helpful! Thanks for watching.
Omg. I’ve been praying and doing the math on whether we should sell or keep the property this video came just on time. I would like a 2nd opinion🙏
Glad it was helpful! It's not an easy decision but I hope it gives you some ideas.
I have two options
1. Sell pay debt and buy two houses.
2. Don’t sell keep renting get a heloc to Lowe the interest rate in my credit cards….
🤔🤔🤔
I personally keep my investment properties completely separate from my personal finances. I recommend finding another way to pay off your credit card debt and then never going back in it. What’s the point of having an investment if you just use it to pay down a bad decision to go into debt. Tackling the debt separately will hopefully help you make difference decisions in the future regarding your credit cards. I say this because I went through the same thing. Ultimately I kept my rentals and found other means to reach separate financial goals.
👍🏻👍🏻@@shauntelcampos3212
Was ready to get rid of a building i own that has no mortgage! Now i changed my mind 😊
Love it!
Great episode Chad! Erion is one of my favorite guests on your channel. The comment about "Don't sell just for the dopamine rush" really resonated with me. What I would love to see is a comparison of ROE in a mature real estate portfolio vs. an index fund. Paula Pant should be your guest. I like Paula because she has both Rental Properties and Index Funds. ... and you have a "Small and Mighty" portfolio. Let's compare these two types of investments. Stocks vs. Mature Rental Portfolio (maybe a rental with no debt). PS. John Schaub is my second favorite guest of yours. But Paula is great on air. Get her on your show!
Reason number one for selling - Too much equity. What would be the argument against a HELOC against that equity to buy another rental, vs selling and dealing with a 1031.
Assume you have a property worth $500k, you owe $150k, and can take a HELOC at 80% LTV. Reason 1 is not return on equity, but what if you can pull that out, make more and avoid the headache/pressure of a 1031?
Now you have 2 properties appreciating vs 1
Heloc is definitely an option if you don’t want to sell. The potential arguments against it would be: 1) high interest rate on the heloc 2) variable rate in a high volatility environment and 3) being able to only use a fraction of your equity.
Beautifully done video so straightforward 👏
Thanks for watching!
🎉❤Love hearing two masterminds Coach and Erion. You may not know me but I have gathered lot of knowledge from you guys wisdom. Tbh I never thought of this aspect of selling your rental properties. Currently have 3 single family quality homes renting $2100-2200 range. 4th SFR coming up in June.
Glad to hear it was helpful! Congrats on your properties..
Do you have a strategy to invest cashflow into existing property build out for the purpose of 1. tax strategy; 2. expand rental portfolio; 3. increase equity. All of my properties allow more unit buildout - looking at buildout vs 1031.
I listed one of my rental properties for sale reason being..its appreciated in value...and i feel it has features that make it a more desirable home but at the same time a less desirable rental property,(( a huge yard,a water well,rural area))
Makes sense! Thanks for sharing
Great episode, Coach! This is exactly what I needed as I navigate through market fluctuations. It seems like all the experts focus on starting out or the positive aspects of real estate investing, but none of them delve into the challenges or failures they faced on their investment journey. Many of us jumped in during or after Covid, and we're struggling with rising interest rates, increasing insurance costs, and more. It would be helpful to see more videos like this, providing hope that enduring the downsides leads to a light at the end of the tunnel. Thanks again for the insightful video, and I look forward to more content like this in the future!
very helpful feedback. Thank you Matt! And I appreciate you following my channel. Best of luck with your next steps.
Very good and insightful conversation, Coach Carson! I ponder this with my portfolio and think about the return on equity. I have some properties that are growing in equity faster than rental growth that I think about selling, but I start thinking about the continuing growth in the years to come and how its a savings account that will likly continue to grow so I usually talk myself out of selling even though the property is not a great cash flow in today's market.
Yeah, it's counter intuituive because cash flow is more measurable. but a good property in a good market can make you wealthy if you just hold on
@coachchadcarson, would you consider a property that has doubled in price from $260k to $520k in the past 7 years, but only cash flowing $200 per month a keeper? Class A neighborhood, but the lack of cash flow is nagging at me .
Coach, thank you for the video. While I don’t ever intend to sell any of my rental properties, it’s good to have this video as a resource in case I ever change my mind. One question does occur to me that I wish you would’ve asked, it is as follows:
What if you have a good reason to sell (for example, the neighborhood is going downhill and the type of tenants you are attracting are subpar) but as you are preparing to sell, a bad reason rears its ugly head (market fluctuations arise causing a drop in home values). Which rationale should take precedence over the other? Should I wait it out and deal with a crumbling neighborhood and undesirable tenants? Or should I ditch the property as soon as possible to avoid the problems of a crumbling neighborhood and undesirable tenants and sell the property at a price that is less than desirable (possibly even a loss) because of the fluctuations in the marketplace? Perhaps you can reach out to your guest and ask him for his input on this?
I can share a story on that. I bought a number of properties in 2007 (right before the recession) that were not good long term rentals. I made mistakes on locations or paid bad prices.
Some we sold right away to cash buyers when we could. Others we sold with owner financing. And still others we kept until the market turned around.
Neighborhoods aren't like stocks that crash under your feet. They change slower. You have time.
So, if you have a loser property I say try to sell asap. But if market conditions don't allow, most of the time be patient and be creative to get it sold. And in some cases, take a loss if you have a better opportunity to reinvest into
Great Question! Like Coach mentioned during the episode, the deterioration in the quality of location does not happen overnight. This is where you try to sell ahead of potential problems in the horizon. But if the current market environment is not favorable to sell where you would take a steep haircut on the sales price, then you can ride it out and hold on to the property until the conditions improve. The key idea is to sell only when it's advantageous to your long term plan.
All the education is how to get properties. What I need is now that I have a bunch what’s the best to do with them ! Good content
Agree! That's what I am trying to focus on more on this channel. Going from building wealth to using your rentals to live
I sold off a couple and paid off mortgages. But, with prices, current rents and increased value I think perhaps it wasn’t the way to go. Whatever, it’s working fine but I am thinking about selling my last two properties. I just can’t see where I can make the money I am making with my properties.
Love it. Thanks.
I have two properties. How do I calculate ROE?
Coach what I appreciate about you the most is your wisdom and giving us guests with content that's easy to digest!
Thank you for the kind feedback! I appreciate you watching.
Thanks Coach.
I sold my duplex cause it was costing too much to maintain
13:18-14:15 this should be a short
Noted! Thank you! We'll see what we can do
Hi Coach Is 1st lien HELOC available and allowed in Texas? I have 2 primary and 3 investment properties in Dallas TX. I would like to explore it for sure.
How do you think AI will effect peoples migration? Like will AI cause people to leave entire cities and make them a ghost city?
I don't think so. I think we'll be more productive and cities will be even bigger
But if AI allows people to build a house anywhere why would someone live in a city that is in the middle of no where?@@CoachChadCarson
Coach, should I be ruling out blue states? I wouldn't want people thinking they can live for free in my joint.
Some states are definitely more tenant friendly. But if the other benefits outweigh the negatives it can still make sense.
Unfortunately for me I would love to sell my units. But I can't get the cash flow in properly And i've been looking in different states even
Good luck!
How to sell my rental without my profit being eaten up by the taxes on that sale!??
You execute a 1031 tax deferred exchange. Sell the property and the proceeds are transferred into a replacement property (or multiple properties) and you avoid paying capital gains taxes on the sale.
@@InvestingArchitect I always see people offer this as a solution, but it is *not* helpful for someone who is *not* looking to get another property. What would you say, for someone who just wants to get their cash without losing it all to taxes?
@@snatchinitback4635 if you’re not looking to get another property, the only way to get *some* of your cash and avoid taxes is a cash out refinance.
@@snatchinitback4635 you aren’t going to lose it all to taxes. It’s 15-20% so that’s certainly not all. It’s your basis less depreciation, less costs to sell and what is left is taxable.
@@Dbb27 You're right - it's not *all* (slight overstatement on my part), but that 15-20% HURTS! That's what I wish there was a solution for.