Real Estate

Sell my real estate to invest or Refinance??

  • Last Updated:
  • Jul 15th, 2021 4:16 pm
[OP]
Newbie
Dec 15, 2020
18 posts
8 upvotes

Sell my real estate to invest or Refinance??

Looking for some advice guys…I am 44, IT consultant with the liberty of being able to work remotely. We are a family of severn and our children are homeschooled so we have the freedom of travelling.

To the point…We have our principal residence worth 1.5million and three investment properties worth another 1.5 million. All total have about 2.8 million in available equity and my rentals generate 75k gross or about 35-40k net . We have been debating on cashing in on them all and possibly renting something here until we see if market has a correction or even possibly, moving to another country and buying/renting something near the beach or even a very small hotel for about a million dollars that we can manage. I would then invest my available cash in dividend investing stocks or ETFs to generate a lifelong annual income.

If I were to sell it all, after commissions and taxes, i would estimate I would be left with about 2.175 million from the 2.8 million in existing equity. (that’’s a huge amount and would need to find a way to minimize that, but i guess that is another topic). Problem is I will be possibly on rent and if markets never correct and keep rising, I might have to always stay on rent or end up paying a lot more for a house than I sold for. I also don’t think I would be able to get a HELOC on the small hotel or home I buy, as it will be in a small European country.

My other option would be to get a HELOC on all, but due to the fact that I am the only earner, the max I can go get is about 1.5million on all properties combined. This would allow us to continue living in our existing home, generate income from our rentals but at the same time invest this equity in dividend stocks while deducting interest costs.
The downside is that we would not be in a tropical climate and will end up spending pretty much all our rental income on yearly family vacations and our cost of living is much higher here, plus not as happy.

Which makes more sense to you guys and are there more downsides/risks than I mentioned?
17 replies
Deal Fanatic
Mar 27, 2004
8883 posts
7083 upvotes
Toronto
heloc
Full-time Realtor
Deal Addict
Jan 15, 2010
1534 posts
1892 upvotes
Toronto
Where do you plant to retire? How important is the warm climate? Are you willing to live in a warm climate without running a small hotel?
Sr. Member
Dec 28, 2010
915 posts
403 upvotes
Toronto
plaza99 wrote:
The downside is that we would not be in a tropical climate and will end up spending pretty much all our rental income on yearly family vacations and our cost of living is much higher here, plus not as happy.

Which makes more sense to you guys and are there more downsides/risks than I mentioned?
In bold is your key to answering your own question.
1. Why would you need to sell all your investments, can you do a mix of sell+heloc and keep one.
2. As for what will do next, hotel etc..since you are in IT , you have the skills that will be appreciated in most countries.
3. Who knows what path you will finally take, we all write or imagine our future stories but life's an adventure. you might come up with better ideas and more opportunities in your new place. Or you might fail and appreciate what you had here.
4. I am in favor of going on this adventure with calculated risk. Not all in , not all out.
5. Also, one can never assign a $ tag to the reward of a new path or experiences in life. Just as you mentioned we spend $$$ every year to get those 2 week vacation. Whereas we are fortunate to live in these times of connectivity and digital age that everything from work, medical consultation, education is possible from anywhere.

good luck with whatever you decide. And thanks for sharing this, kind of relate to what you feel, except for the huge investments :) , slowly getting there.
Deal Fanatic
Mar 27, 2004
8883 posts
7083 upvotes
Toronto
plaza99 wrote: Thanks for replying...Can I ask why?
I personally believe prices are still going to appreciate. your primary residence is going to be tax free gains.
Full-time Realtor
Deal Addict
Feb 19, 2019
1970 posts
3096 upvotes
Stouffville ON
Your plans are allover the place so you need to narrow down what is the most important for you, not just from the investment perspective but also lifestyle.
If someone asked me about buying first or second investment property I would say heloc, but you already have 4 properties and have plans from retiring in warm climate to a hotel and everything in between.
I would only say don't time the market.
Full Time and Full Service Realtor
Deal Addict
Jan 1, 2017
1826 posts
1871 upvotes
senasena wrote: Your plans are allover the place so you need to narrow down what is the most important for you, not just from the investment perspective but also lifestyle.
If someone asked me about buying first or second investment property I would say heloc, but you already have 4 properties and have plans from retiring in warm climate to a hotel and everything in between.
I would only say don't time the market.
I agree that OP needs to figure out what he wants in life and the lifestyle he wants. The. Based on that you can figure out what to do with your investments.
Deal Fanatic
Mar 27, 2004
8883 posts
7083 upvotes
Toronto
2.1m isn't a lot with 5 kids.

I see no reason to cash out and sit on cash thinking there is a real estate crash.
Full-time Realtor
Jr. Member
Nov 21, 2013
185 posts
57 upvotes
Markham, ON
Make your most expensive property your primary residence and sell others if needed. No cap gains on it as it continues to appreciate.
Deal Addict
Mar 2, 2017
3510 posts
6822 upvotes
Toronto/Markham
OP, it's unclear what you are solving for, in other words what do you want and why?

The size of your family and as a single earner I'd probably mitigate for risk from that angle. Are you looking to move now because you are unhappy?

Just because you CAN do something, doesn't mean you should.

You could try the lifestyle you want for a year or two while not selling anything, and then reassessing after 12-18 months if it's for you, at which point you can liquidate whatever makes the most financial sense.
RE Broker
[OP]
Newbie
Dec 15, 2020
18 posts
8 upvotes
oasis100 wrote: 2.1m isn't a lot with 5 kids.

I see no reason to cash out and sit on cash thinking there is a real estate crash.
I have other assets, but i think 2.1 mill more than enough for 5 kids. I guess it all depends on everyone's expectations. Two are already done post secondary and one will be done in two years. Then left with two :)
Member
Jul 2, 2018
313 posts
308 upvotes
I talk to people in a similar situation all the time.

1) I would refinance and acquire more assets.
2) A 1m motel will not be worth the hassle of running. I know this industry very well.
Realtor + Investor
Deal Addict
Mar 2, 2017
3510 posts
6822 upvotes
Toronto/Markham
plaza99 wrote: I have other assets, but i think 2.1 mill more than enough for 5 kids. I guess it all depends on everyone's expectations. Two are already done post secondary and one will be done in two years. Then left with two :)
You had your first at 19-20?
RE Broker
Deal Fanatic
Jul 3, 2011
6517 posts
3793 upvotes
Thornhill
Seems to me you have one goal to wealth build and want 3 things,
plaza99 wrote: moving to another country and buying/renting something near the beach

or even a very small hotel for about a million dollars that we can manage.

I would then invest my available cash in dividend investing stocks or ETFs to generate a lifelong annual income.
Using the numbers you provide you only have debt of $200k on all 4 properties, presuming it is all on the investment properties, at the very least you would be left with a net of approximately $760,000 if you sold those.

You can accomplish all 3 things by selling those 3 rentals plus get a heloc on your principal residence to top up that $760k to buy a property in a vacation spot that you can use for your own vacations and rent out the rest of the time and invest in your stock portfolio.

This tidies up your investment properties to 1 rather than 3 + 1 and achieves the same 3 wants you're looking for.
[OP]
Newbie
Dec 15, 2020
18 posts
8 upvotes
RealtorInvestor wrote: I talk to people in a similar situation all the time.

1) I would refinance and acquire more assets.
2) A 1m motel will not be worth the hassle of running. I know this industry very well.
1m motel here is not worth it but in the european country I am looking for, we are looking at a 8-16 unit. I definately won't be rich from it and need to see if worth it as opposed to putting it in dividend stocks, but it would keep me diversified, give me a place to stay and also one day I could also separate it and give a unit or two to each child

Again...just thoughts.
Deal Addict
Jan 13, 2014
2628 posts
1801 upvotes
Calgary
this is almost like those episodes from Hotel Nightmare Gordon Ramsey blaring in on his Harley to save a million dollar hotel from collapsing after the owners sold everything to buy it.

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