Selling Positve Cash Flow Properties
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  1. #1
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    Default Selling Positve Cash Flow Properties

    Along with other speculators, my wife and I got caught up in getting too many investments too fast. I'm starting to read Dave's book and we're ready to start clearing the plate. And want to free up capital for "focused intensity".

    We have a couple investment properties in Youngstown, Ohio and we have mixed feelings about selling them. They are positive cash flow with a 7% mortgage (barely) which is impossible to find where I live. However, the investment would be better suited once we complete Dave's program and could buy without the mortgage. If we could pay cash for these $40k houses (not slum houses), the taxes and insurance would be covered in just 2 months of rent. Leaving the rest for any unexpected tenant lull or repair.

    Like I said we loved these but we're not ready for them. Hopefully we can do this again when we finish Dave's Total Money Makeover. For any of you who are at that point already and are interested let me know.

    These properties are essentially $40k ea, Zillow has them $40-60k, rental income is $400-550/mo, we have a good property manager in place, taxes $550-600/yr, insurance $200/yr.

    If you're interested call 407-841-1628 ask for Todd or Betty, or send me a Private Message. I'll send you pictures of the property and answer any question. I'm not an agent, so would prefer to deal By Owner and cut out commissions.

    We're not looking for profit, just liquidating assets.

  2. #2
    Rude and Vile Master Greebo's Avatar
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    This is a subject near and dear to my heart as well, because I just got into real estate last year about 2 months before discovering Dave.

    One of the things I've heard Dave explicitly say on the radio is that if you have real estate and it's really cash positive, you don't need to sell the properties.

    We made a conscious choice to keep our property because by keeping it, we knew it WOULD be cash positive within a year, even though it wasn't when we started our TMMO. We finally hit that point.

    So I'm curious - if the cows are giving milk, why weaken your income stream? If you sell them now, then will you end up *ahead*? Will you, after the closing costs of the sale *and* the buy, break even?

    If not, you may want to rethink this. Even if they only make a little money after vacancies, IF they make money, keep them. Take the profit and put it in the snowball.
    If you could kick in the pants the person responsible for your problems, you wouldn't be able to sit for a month.

    Did you know that a 4 year student paying $20,000/year who finances their education graduates with over $103,000 in debt to start? But a student who works and pays cash and takes 6 years to graduate ends with $6,300 in their pocket! So much for "getting a head start by financing!"


    Greebo
    (Nerd Spender): Loving and extremely patiently tolerated husband of ceashels.
    WARNING: Y Chromosome behind the keyboard. Adjust your listening filters appropriately!

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    Two mortgages, two one no car loans, one no credit cards, and a partridge in pear tree!

  3. #3
    Moderator mauimagic's Avatar
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    Good clear thinking as usual Greebo - always love reading your point of view!!
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    “Decluttering isn't just simplifying your life. It's having a vision, setting new priorities and using those notions to get rid of obstacles.”
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    Default Selling Positve Cash Flow Properties

    It is positive cash flow (with 7% mortgages) by a small margin. We have about $25k tied into the equity that we'd like to free up. A better investment would be to buy without a mortgage. A place I would like to get to, but is still a ways off.

    So my strategy, in this case, would be to focus the equity that would be freed up towards our other debt. The cows are producing a small amount of milk at the moment, but after hard lessons learned such as shop around for homeowners insurance saved us a ton, make sure the house is not running the heat full blast without a tenant, shop around for a good property manager you can trust, etc. We learned along the way and these extra expenses hit us hard when we didn’t (and unfortunately don’t yet) have a buffer fund to cover the ups and downs.

    Amazingly, these properties have not lost value from where we bought them. We did get good deals on them and similar houses (at least Zillow’s guesstimate) are around where we bought ours for or higher. Plus we have some tenants.

    If a tenant leaves, it will be negative cash flow, if we gain another for one of the vacant units we’re more in the money. But if we had paid cash for these properties, the peaks and valleys would seem minimal over the year. With a mortgage payment, it’s a gamble.

    We do have another property in Orlando where I live, but it is negative cash flow and we owe more than its worth, so by using the equity assets of the Ohio properties, we can chew up our credit card debt and loans and accelerate the snowball faster.

    Anyway, that’s where we’re at. We do want to sell and look at opportunities like these when we get debt free and can pay in cash.

  5. #5
    Rude and Vile Master Greebo's Avatar
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    OHH - you're LONG DISTANCE land lords!

    Oh well then yeah, get the hell out of those things. That's almost exactly what Dave has said to other callers in your scenario too. (Dave would not say "the hell out of" )
    If you could kick in the pants the person responsible for your problems, you wouldn't be able to sit for a month.

    Did you know that a 4 year student paying $20,000/year who finances their education graduates with over $103,000 in debt to start? But a student who works and pays cash and takes 6 years to graduate ends with $6,300 in their pocket! So much for "getting a head start by financing!"


    Greebo
    (Nerd Spender): Loving and extremely patiently tolerated husband of ceashels.
    WARNING: Y Chromosome behind the keyboard. Adjust your listening filters appropriately!

    Three
    Two mortgages, two one no car loans, one no credit cards, and a partridge in pear tree!

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