163 Poplar Street

Written by BPT

Wednesday, 12 May 2010 01:32

My husband invested in the 'Flip' camera after taking this video. It's a little dizzy, at points, but the commentary is the best! : )

We listed this property for sale at $328,900 on Thursday of last week (May 6th). So far, we have had 7 showings and some positive feedback.

Unlike the others, this property is not a quick flip. In fact, this is the first property my (now) husband and I ever purchased, as a team. We bought the home in 2006 for $130,000 and immediately dumped $100,000 into it, to perform a head-to-toe rehab. We then rented the home to a family for the next 4 years, at a rate of $2100/month.

I almost hate to see the place go but the time has come. As I tend to repeat quite frequently, it is ALL about the numbers. There is simply too much equity in the home and it is not performing to the best of it's ability. To explain further, compare the following situations:

With a $26,000 down-payment, we purchased the property. After all expenses, we will making a profit of approximately $350/month ($4200/year), which translates to a ROI (Return on Investment) of 16% (4200/26000).
Years later, the value of the home has increased and the equity in the home is now $105,000. This means the ROI has shifted DOWN to 4%. (4200/105000)

So the question becomes, can we do better than 4%? We believe we can. At this point, typically you have 2 options - refinance and pull out equity to re-invest OR sell.

Due to the current banking conditions, refinancing is not an option for us, as investors. Therefore, we opt for sale. If we want to defer taxation, we will use a 1031 exchange. More about that later.....

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