- In 2017, I sold the San Francisco rental property I’d owned for years for $2.75 million. Investing the proceeds provided enough passive income to allow me to be a stay-at-home dad.
- Now, just a few years later, I’m again feeling bullish on real estate. I think now is the time to buy something else.
- Prices have softened all across the US, mortgage rates have collapsed, and the stock market is back to an all-time high. Plus, rents continue to tick up, wage growth is reaching new highs, and the next recession won’t be as severe as the last one.
- However, I’d love for those of you who are bearish to blow my arguments to smithereens.
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Back in 2017, I had a very difficult decision to make. My rowdy tenants gave notice and I had to decide whether to sell my rental property or try and find new tenants.
The house had been rented between 2014 – 2017 for $8,200 – $8,800 a month. But when I went to find new tenants at a similar rent in 2017, none were to be found. Instead, I got a couple of offers for only $7,500 a month after 45 days of looking.
Because my tenant situation gave me stress and my son was just born, I really felt that 2017 was a good time to sell. Further, I was running up against the $500,000 tax-free profit exclusion limit.
Earlier, in 2012, I had tried to sell the house for $1.7 million and received zero offers. My agent at the time told me one couple was looking to lowball me at $1.5 million and I told them don’t bother. Fast forward five years, I was able to find my one and only offer for $2.75 million so I took it.
After paying fees, taxes, and the $815,000 mortgage, I was left with about $1,800,000 in proceeds. Over the next 60 days, I invested $600,000 into dividend-paying stocks, $600,000 into California municipal bonds, $550,000 into real estate crowdfunding, and left ~$50,000 in cash.
So far, the reinvested proceeds have done well. But most of all, the reinvested proceeds have provided a greater amount of passive income with minimal work on my part. I’m extremely thankful I was able to free up time since mid-2017 to be a stay at home dad.
I’m also thankful to the Financial Samurai community for sharing their thoughts about whether or not to sell back in 2017. After over 1,000 votes, 75% of you said sell, which gave me added confidence to let my once beloved property go.
In this post, I will argue that a golden opportunity to buy real estate is once again upon us. My spidey senses are telling me it’s time to buy at least one property before January 1, 2021.
After I finish telling you why I’m getting bullish on real estate, I’d love for those of you who are bearish to blow my arguments to smithereens.