Should I Sell My 4% Interest Rate Rental Property? ($300K in Equity!)

Should you keep, refinance, or sell your rental property? If you’re sitting on a low mortgage rate and plenty of equity, you’ve probably asked yourself this once or twice within the past year. Most people who bought a rental property before 2020 have seen unprecedented appreciation and rock-bottom interest rates and are likely sitting on a war chest-sized home equity position. But that equity could be better spent investing in new properties than keeping your old ones. This is Dave’s exact predicament. He’s got a property he bought back in 2016 that has over $300,000 in home equity. It’s cash flowing a solid $500 per month with a mortgage rate of just under four percent, but only producing a measly two percent cash-on-cash return. He’s getting four times the return on his recent investment property purchases, so should he sell? Not so fast; we’re doing the math to figure out whether he should keep, refinance, sell, or change strategies on this property. Got the same good problem? Stick around as we even drop a fifth option most investors overlook entirely, which gives you the best of both worlds. In This Episode We Cover: Whether to keep, refinance, or sell a low-performing rental property The obvious problem with cash-out refinancing in 2024/2025 Why we DON’T love doing 1031 exchanges (and a tax-advantaged way around them) Converting your long-term rental into a medium or short-term rental (MORE cash flow!) How to access home equity WITHOUT refinancing your property or getting a new loan And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Ask Your Question on the BiggerPockets Forums Grab Dave’s Latest Book, “Start with Strategy” Get a Quote on Your Next Short-Term Rental Loan with Host Financial Find Investor-Friendly Lenders Keep or Sell? What to Do When Your Rental Doesn’t Cash Flow Connect with Henry Connect with Dave (00:00) Intro (01:20) Property Details (04:51) 1. Keep the Property (07:12) 2. Refinance the Property (10:29) 3. Sell the Property (17:12) 4. Convert Into a Mid-Term Rental? (21:10) The Best Option? (22:24) 5. Use Home Equity Instead Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1055 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:05Speaker 00

  How do you know when to sell a successful property? Or should you hold on to successful properties or refinance them? This is one of the most common questions that I get these days. And as I was thinking about how to talk about this on the podcast, it actually occurred to me that I have a property that I am about to go through this process of thinking through. And I've invited on Henry Washington to join me to actually just talk through this property and this problem, this challenge, this question that I'm facing in real time. And although we are going to talk about one of my portfolio properties, I think this conversation is going to be super helpful to everyone because it helps provide a framework

• 0:45Speaker 00

  for thinking through the best way to use your money and to optimize your portfolio over the long run. So Henry, welcome and thanks for helping me out on this portfolio management question today.

• 0:57Henry Washington?

  First and foremost, this is really cool because a lot of investors either have faced this problem or will face this problem in the future. And I believe people need to be analyzing their portfolios at least once a quarter. But selfishly, this is fun for me because I love spending other people's money. So let's talk about how I would spend yours.

• 1:17Speaker 00

  I'm nervous now, but let's do it.

• 1:21Henry Washington?

  All right. So first things first, Dave, tell us about this property.

• 1:24Speaker 00

  Well, it's my former primary residence. As you might know, in 2019, about five years ago, my wife got transferred to Amsterdam for work. So we moved from Denver, decided to rent out our primary residence. We bought it back in 2016 for $460,000. It's in a great neighborhood, been very fortunate. It has appreciated, I think it's worth sort of conservatively like 750. I sold the property just down the street for 800, but that was in 2022. So it was a little bit hotter then. And right now I'm renting it out for 3450. I'm getting probably on average 500 bucks a month in cash flow after really truly all the expenses. Cause I have a really good interest rate on it, refinanced in 2020 to 3875.

• 2:10Speaker 00

  And so it's a solid rental property, getting six grand a year in cash flow. But as I just mentioned, I'm sitting on a lot of equity, which is a good problem to have, but it sort of brings up the question if I'm using my money efficiently.

• 2:25Henry Washington?

  Yeah, well, I mean, yeah, you're sitting on about $300,000 worth of equity, right? And so one of the things that I typically ask people when I'm faced with questions like this, or when they ask me questions like this is what are your real estate goals over the next one to three years? Because your goals should dictate what you do with your current portfolio or how you choose to grow.

• 2:48Speaker 00

  That's a great question. So basically, I split up my investing into sort of three different buckets recently. So I do long-term rentals. I still buy long-term rentals mostly in the Midwest now. Then I invest sort of passively in larger value-add types of projects, either in syndications or passively into flips. And then I've started doing some private lending over the last couple of years. And so I like keeping it sort of a third, a third, a third roughly. And so if I did sell or refinance this, I would want to fill up my other, that bucket of long-term rentals. So like more low-risk kind of cash-flowing properties, but I don't need them to cash flow today.

• 3:32Speaker 00

  These, like, I buy rental properties because I want to 10, 15 years from now to have them mostly paid off and to have a solid income that I could replace my full-time job from.

• 3:45Henry Washington?

  Okay, so said differently, you would sell this or you would cash out of this and essentially take that money and buy more cash-flowing assets. It's not like you take that money and use it to go lend more money.

• 3:58Speaker 00

  Yeah, yeah, I think that's sort of what I would think about doing here.

• 4:02Henry Washington?

  Okay, well, that's good information. I obviously am going to have more questions. But as I see it right now, you've probably got about four options. There's probably a couple of more, but typically they're going to fall in these four buckets, which would be, one, you could keep the property, but try to increase the cash flow or monthly return that you're getting. You could look to refinance that property, which would give you access to some cash that you could use to go and buy more cash-flowing assets. Or you could sell the property, just straight sell it, cash out of it, and then use that money to go invest in more properties. And lastly, you could Change the strategy. So maybe you could convert this property to a different rental strategy that might produce more cash flow for you.

• 4:46Speaker 00

  Yeah.

• 4:47Henry Washington?

  So let's talk about a few of these options. Sound good?

• 4:49Speaker 00

  Yeah, let's do it, man.

• 4:50Henry Washington?

  All right. So, starting at the first one, keeping the property, but trying to get a better return. How do you feel about that?

• 4:59Speaker 00

  So I think there's two parts of this. Like, can I get a better return? Probably a little bit. I think I could get rents up a bit higher because there's actually a two-car garage at the property that I don't rent out because I have, again, like, I never knew how long I was going to stay in Europe, so I kept a car there. So I actually have a car sitting there and just some stuff. So I could clear that out and rent it out. And I think that could raise rents 100 bucks, 150 bucks a month. So that would help, but it wouldn't really fundamentally change the math here. I think the biggest question to me is like, should I hold on to it for future appreciation? Because Denver has been great for appreciation.

• 5:40Speaker 00

  And I guess maybe I'll just explain to you a little bit about the neighborhood. The Denver, a couple of years ago, built this light rail from downtown to the airport. It was this big project, super successful. And as part of that, they announced that they were gonna basically convert this entire street into this really cool park. And so the only time I've ever been not so lazy and called around to find off-market deals was because I was like, I gotta get a house on that park. And so my agent found out where they did eminent domain. He found out like exactly where the lines were. And I just called people on the line and got someone to sell me that house. That park is built now. It's awesome. It's

• 6:20Speaker 00

  obviously helped increase the value of the property. And there are some more plays that can happen there, but Denver's pretty flat these days. Like, rent growth is flat, housing price is pretty flat, multifamily is overdeveloped there. And so I'm not feeling great that I'm going to get some huge appreciation boost unless, not in the next year or two at least.

• 6:41Henry Washington?

  Okay. So you're just assuming your average to national average increase in home value?

• 6:48Speaker 00

  Yeah.

• 6:49Henry Washington?

  Okay, okay. And in terms of rent, you don't think there's much more you can do there? You're at the max unless you get a little creative and run out of garage space to an existing tenant or something like that.

• 7:00Speaker 00

  Yeah, I don't see it going up that much more.

• 7:03Henry Washington?

  Okay. The other question is, considering that you are considering tapping into some of these funds in order to buy more cash flowing properties, if you got rid of this property, which would, in my opinion, refinancing it or selling it is technically getting rid of your cash flow because you're going to refinance it at a higher price point, which means you're going to kill your cash flow. What's the cash on cash return you'd be looking to get in comparison to what you're getting on this property?

• 7:31Speaker 00

  Yeah, so let me figure out what the cash on cash return is because you said it's so I owe three ninety-two. Let's just round down and say after all the selling costs, I clear seven hundred, right? So that's three oh eight. So I'm only making, this is not good number. Six hundred grand divided by three oh eight. That's two percent cash on cash return. So I could do better than that. I could do better than that. You know, some of the Midwest rentals I'm getting after rehab stabilize them, you know, eight percent, something like that right now. But I think those properties have as good of a chance of appreciating. And actually, at least one of them I bought is much better, a chance of appreciation.

• 8:15Henry Washington?

  So obviously, if you go to refinance this or you go to sell it, you can take that capital and you can go buy more properties. How many properties would you be looking to buy based on the amount of money you could access on a refinance?

• 8:28Speaker 00

  Yeah. So the way this math works, I'll just sort of do it out loud for people is if I think this property is worth seven fifty and that's what it would appraise for, I'd as an investor now have to put twenty-five percent down. And so twenty-five percent down would be a hundred eighty-seven thousand dollars. And my equity was three ninety-two. So I could pull out like roughly two hundred grand, let's call it. So I think, you know, given the four units I've bought in the Midwest this year, I could probably do that again, four more units, roughly.

• 8:59Speaker 00

  Basically be repeating two similar deals. And at that rate, I would be increasing my cash flow on that 200 grand to, let's call it 9,000 a year. But I would have to subtract the negative cash flow because raising my interest rate would probably, and pulling out the equity would probably make my cash flow on this property in Denver go negative.

• 9:21Henry Washington?

  Absolutely. Yeah, I don't see how it wouldn't go negative if you were to refinance. That's why I don't really love option two for you either. So keeping it as a rental, hmm, not bad, but not great. Refinancing, I, this is my least favorite option so far is refinancing.

• 9:37Speaker 00

  The only thing I like about this deal right now is that interest rate. If you refinance it, I hate it. I don't hate it. There's nothing very attractive about it anymore. So, so far, Henry and I have talked about option one, which is keeping the property. Option two is refinancing to a cash out refi for the property. We are going to take a quick break, but after that, Henry is going to walk me through the third and fourth scenarios. He talked about which was selling the property or converting it into a different strategy. We'll be right back. If you're building a real estate portfolio, your banking setup matters more than you think. Because the more properties you add to your portfolio, the more complicated managing the money can get.

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• 13:30Speaker 00

  Everyone, I'm back here with Henry Washington. He's helping me out with a portfolio management question. We are talking about my former primary residence and Henry, I think you were about to ask me about the third option you proposed, which was potentially selling this place.

• 13:46Henry Washington?

  Yes, that's right, Dave. We're here to talk about option three, and that is selling this property. So if you were to just say, you know what, I'm going to stick this thing on the market, what do you think it would sell for? But more importantly, what do you think you would net? And that's before taxes.

• 14:04Speaker 00

  Yeah, so I think that I would net 700. It's just kind of like, maybe a little bit, probably around 700 because I, I think the value is about 750. I sold a very similar house down like two blocks away for 805, but that was in April of 2022. So time that one well. And I think this would, I think it's a little bit softer in Denver right now. So I would think, you know, 750, 760, you know, commissions, spend 15, 20 grand cleaning it up. I'd say 700 and then my loan's at 392. So what does that come out to? Three, yeah, 308 was the number I was using

• 14:46Speaker 00

  before. And I'd probably do a 1031. So like I, or I think I would. I mean, maybe we need to talk about that. That's my assumption. If I'm going to put into another rental property, I'd probably do a 1031.

• 14:56Henry Washington?

  Yeah. So that was going to be the next question is obviously there's going to be capital gains taxes, right? Because you haven't lived there two out of the last five years since you've been in Amsterdam.

• 15:05Speaker 00

  Correct. Zero of the last five.

• 15:07Henry Washington?

  Zero of the last five years. You've lived there. And for those of you who don't know, you as an investor, if you sell a property that has gone up in value, if you have lived there two out of the last five years, you actually do not have to pay capital gains taxes. But since Dave has not lived in this property two out of the last five years, he would have to pay long-term capital gains, which is at what percent right now?

• 15:31Speaker 00

  I think it's 20%.

• 15:33Henry Washington?

  So not terrible, right? But it's, it's, it's a chunk of change when you're talking about putting $300,000 in your pocket. So yeah, your options are sell it and 1031 or sell it and not do a 1031. Here's my unpopular opinion about 1031 exchanges is I don't love them.

• 15:51Speaker 00

  They're so stressful. I've done them. They're so stressful.

• 15:55Henry Washington?

  In theory, they're amazing, but in practical application, oftentimes they're not executed well because what happens is you get yourself into a time crunch. Do you want to, do you want to talk about the time windows that you have in a 1031 exchange real quick?

• 16:11Speaker 00

  I think that the rules, and I will look this up as I'm talking, is that you need to identify the properties that your, your replacement properties within 45 days, which is tight. And then you have to close on them within 180 days. So closing is actually not hard at all.

• 16:27Henry Washington?

  Correct.

• 16:27Speaker 00

  It's that you have 45 days to find, negotiate and put under, you don't actually have to put them under contract, but in practice, you kind of do have to put them under contract to make it worthwhile. That can be stressful, especially in a really hot market. Now it's a little bit cooler, but it's still stressful.

• 16:48Henry Washington?

  And the other hang up with that strategy is not only do you have to stick to this time window, but you have to be buying something of like value or higher. So that property has to be a more expensive property or a more valuable property than the one that you were selling. Now you can package properties. So you can buy a couple of them in the Midwest. But what I find often is because of the time crunch and because people are so scared about the tax hit that they're going to take is they go and they buy something that's not necessarily the greatest of numbers because they'd rather avoid paying the capital gains taxes than to wait around and find a deal that financially makes the most sense.

• 17:33Speaker 00

  Yeah.

• 17:33Henry Washington?

  And so I would just say that if you choose the 1031 strategy, you're going to have to truly find something that works or else, you know, or else you could get, end up still paying that money. You're just now not paying it in taxes. You're just paying it in less cash flow because you bought a deal that doesn't make as much financial sense.

• 17:52Speaker 00

  Yeah, I, that totally makes sense. Also add one other rule is that you have to take on as least as much debt too. So you can't with the 1031, just like I can't just buy a property for cash. Like that was something I would think about with a 1031. If I could just buy something for 300 grand cash.

• 18:09Henry Washington?

  Yeah.

• 18:09Speaker 00

  That would be great. And then I would refinance it like later. That would work, but that's not allowed under a 1031. And the story I was going to tell us from 2018, like things were just going so crazy in Denver. I did a 1031 and I was like, you know what? Even if I have to do an okay deal, like the market is giving had such strong tailwinds and I was so confident in them. I was like, it's fine. Like even if it's not the best cash flow market, I was buying in a great neighborhood. That worked out great. I don't feel that confidence anymore.

• 18:38Henry Washington?

  So still, given that tight time window, I still think this is the best of the options we've talked about so far for you.

• 18:45Speaker 00

  Same.

• 18:46Henry Washington?

  Another option to think about in terms of taxes. Now I am going to give the caveat that we are not tax professionals. Please consult a tax professional before you make any decision like this. But there's also the option of just selling it, not doing a 1031, but then buying rental properties that are currently in service, meaning they're not properties that you have to do a big renovation on. They're actually ready for tenants and you can put them in service quickly. And by doing that, then you can do a cost segregation study on that property. And that cost segregation study can help you offset some of the capital gains taxes that you will have to pay when you sell.

• 19:23Speaker 00

  Yeah, that's true. I, I would need to think a little bit more about what the 1031 versus not strategy. But I agree so far, selling is the best option of the three. And I don't know, let me just ask you, like so many people say that they buy properties and never sell. You don't believe that, right?

• 19:40Henry Washington?

  I, you know what? No, I don't believe that. And it's, it's like, I would love to, I would love to be that old guy in like 20 years. It's like, I never sold anything I bought and it's a, you should never sell it. Like it sounds, all that sounds amazing until you need money. And you have to sell something like,

• 20:01Speaker 00

  Yeah.

• 20:01Henry Washington?

  It's a business that needs funds and holding properties as we are discussing here. It's not big bucks. We're talking about being a landlord. We're talking this, this. Seven hundred and fifty thousand dollar properties making you five hundred dollars a month, right? Like you need to be able to turn real estate to make money.

• 20:18Speaker 00

  Yeah, absolutely. I bought this deal not for cash. I bought it to live in and I thought it was appreciate. It appreciated. It's done its job very well. Thank you. Need to use that money for a new job.

• 20:29Henry Washington?

  All right. We've covered three options so far, which is keeping the property, refinancing the property, and selling the property. And the fourth option we have here is converting the property to a different strategy, like a short-term rental or a midterm rental. This can seem daunting, but from a portfolio perspective, what I like about an option like this is it forces you to look internally within your current portfolio to see if you can find returns similar to what you might get if you were to sell, but you could get them in your same portfolio. So what do I mean by that? I have a duplex right now that is a long-term rental and it does fine as a long-term rental.

• 21:12Henry Washington?

  But we have recently had three short-term rentals that we converted to midterm rentals, and they are kicking butt.

• 21:19Speaker 00

  Nice.

• 21:20Henry Washington?

  And so instead of us going and buying another duplex and using it as a long-term rental, we looked internally within our own portfolio and said, what do we have that we could convert to a different strategy and increase the cash flow? So we're taking that duplex. We're going to furnish the units and then we're going to put them up as midterm rentals and take the rent from twelve hundred dollars a month up to around thirty-five hundred to four thousand dollars a month, based on what we're doing in our other units. And so it's going to cost us some money, probably around ten thousand dollars to furnish the property. But that ten thousand dollars is going to net me a much better return in terms of monthly rent

• 22:02Henry Washington?

  than if I were to go take that ten thousand dollars and try to buy another property with it. And so I'm not saying it's the best strategy, but I'm saying it's worth a look into your portfolio to see if I just spend a little money on this property, can I increase the return? From two to three percent up to eight, 10, 11, 12% cash on cash return without having to get rid of the property or tap into the equity.

• 22:31Speaker 00

  Right? Yeah. Yeah. That's a great question. So I actually, I looked into this a little bit. In Denver, there is a ban on short-term rentals unless it's your primary residence. And although this is technically mine, I do plan to buy a new house as a primary residence soon. And so that is not like the spirit of the law and I'm not going to mess around with that. Uh, so I can't do that. Mid-term rental is kind of interesting and I do think I could probably get rents from 3450 to let's call it 3800 because it's in a really good location.

• 23:04Henry Washington?

  Yep.

• 23:05Speaker 00

  It's really nice because it's right near the train and it's also walking distance to a lot of offices and stuff. So if people are there for corporate work or you just, you know, wanted to come work out of Denver, it could be appealing. The problem is just logistical and my not, it's not laziness. Sometimes I joke that I'm lazy. It's just operational. Like my property manager doesn't do midterm rental management. And so I don't know if I want to another one. I already have a short-term rental manager in Colorado. I have a long-term rental manager in Colorado. I don't want a midterm rental manager in Colorado. It's just like a lot of work. I, I guess I would consider it, but that is sort of the one reason I would second guess it.

• 23:45Henry Washington?

  Yeah. Well, I don't know if that reason is financial reason enough for you not to consider this option, but I would say that if you're only going to go from 34 up to $3,800, then it's definitely not worth it. Right? I think if you're going to go from a long-term to a short or midterm strategy, you need to be two to three X-ing what you're making per month for it to make sense. Cause your property management for a midterm is going to cost you a lot more than eight percent.

• 24:11Speaker 00

  Yeah. And you're going to have vacancies. Like you, you know, it's just, yeah, it's going to get like, if you spread out 3,800 over 12 months, I might lose money. So I, I don't know. It's also like, I've thought about, can I put a DADU, an ADU, but it's a pretty small lot.

• 24:26Henry Washington?

  That's a lot of work.

• 24:27Speaker 00

  Yeah. So out of all these, I'm kind of like in selling the property. To be honest.

• 24:32Henry Washington?

  Yeah, I mean, after after reviewing that again, I think the only getting about a $400 a month boost by carrying it to a midterm definitely isn't enough. So I would say that takes this option off the table for you. Now, for somebody else in a different market, that may be a very wise thing to do. But in your market, you're not going to get that return. So I don't like that option for you either. So that leaves us with the option to sell it. But what if there was a fifth option, a super secret ninja fifth?

• 25:02Speaker 00

  Oh, an Easter egg.

• 25:06Speaker 00

  Are you gonna buy it for me?

• 25:08Henry Washington?

  I am absolutely not gonna buy Dave's property, but after the break, I am gonna give him some more advice on what he could do as a super secret option. Number five, we'll be right back.

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• 28:47Dave Meyer?

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• 29:29Henry Washington?

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• 30:13Henry Washington?

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• 30:41Henry Washington?

  And we're back with Dave and we're about to dive into a less likely option that people should be thinking about as they're analyzing their portfolio.

• 30:51Speaker 00

  I'm on the edge of my seat. You made me wait through the whole ad break.

• 30:56Henry Washington?

  One of the things people don't think about when they think about tapping into their equity of a property, a lot of the times is they think refinance, but that's not your only option. You can also tap into the equity of a property by getting a line of credit against the equity. And what I like about this strategy, the old HELOC strategy, is it does not require you to get a new loan at a higher amount. You keep your current mortgage payment, but you can access the equity. And so they would, the bank would essentially take a look at the property, do an appraisal. And then if they say, hey, the property's worth 700 and you

• 31:33Henry Washington?

  owe 400, you've got $300,000 of equity, we'll loan you between 70 and 75% of that equity on a line of credit. And so you could then access that line of credit, but you don't have to use it all. You could literally only use what you need. Now, you will be paying interest only payments on the money that you use. But if you factor that into your underwriting of the property that you're buying, you can technically have that property work to pay back your line of credit through the return that you're getting over the first couple of years. And then once that line of credit's paid off, then your cash flow increases substantially.

• 32:12Speaker 00

  I kind of like that idea. What are HELOC rates right now? Just so we can talk about

• 32:17Henry Washington?

  I bet they're about a point above prime.

• 32:19Speaker 00

  So eight, eight and change right now, probably. We're recording this towards the end of November. Honestly, for, for rental property, that's not that bad, especially like. What I'm thinking about this is like, if you remember the original scenario here was I could probably get the rent up a little bit if I cleaned out that garage and did something with it. So if I got a little bit more rent and then did a HELOC, then I'm getting, you know, I'm going up to seven grand a month. And then if I can earn money above and beyond what I'm paying an interest on that HELOC, then this becomes interesting and give myself potentially

• 33:00Speaker 00

  some upside here in Denver. There. So there's basically this just like a long shot appreciation play that I'm kind of holding on to.

• 33:08Henry Washington?

  Yes, that's what you'd be betting on.

• 33:10Speaker 00

  So right across the park, there's this old like industrial site, which like every developer now is just like salivates at these old industrial sites. And it's incredible. It's this amazing, beautiful property, but the financing always falls through. And I kind of just like, I know if it gets built, it would be one of these like mixed use developments with retail and restaurants and it would be super cool, but I'm losing my patience on it. But this might be a good hedge where if I'm earning seven grand a year in cash flow and I could wait and see if in like the next cycle, this is realistically going to happen. Maybe I'd take that bet, but I don't know. Maybe I think I'll have to do the math on selling versus

• 33:53Speaker 00

  a HELOC. Those, those feel like the two right options here.

• 33:56Henry Washington?

  So here's my personal opinion based on, this is based on what I know about you and and your goals and your portfolio. In other words, this may not be what anybody else in this situation should do or what I would recommend, right? I don't think that you, Dave, are in a position where you need $300,000 in your bank account, right? I feel like it would be nice. But you're probably surviving just fine, right? So I feel like you taking a very educated gamble, quote, air quotes, on appreciation,

• 34:34Henry Washington?

  while still being able to meet your goals of buying more cash flow seems like a good option for you versus just selling it. Now, if somebody was in a position where the cash is much more needed for them, then selling it's probably the best option in that situation. But it sounds like you can reach your goals, keep your property, keep your cash flow, and hopefully get even more appreciation in the next one to five years.

• 35:05Speaker 00

  Yeah.

• 35:05Henry Washington?

  So if it were me, that's the option I'd pick.

• 35:07Speaker 00

  I do like that. It's because I think it would change if all of a sudden in the Midwest or some opportunity came up where it's like a screaming deal and I wanted 300 grand. But like, they're better cash flow deals. But like I said earlier, I think depending on the deal in the Midwest, they have an equal opportunity to appreciate in the next, in the next couple of years. So maybe you hedge a little bit and spread it between the two. And although Denver's been flat, I do think Denver is like one of these markets like Austin and Boise where it's like, it got oversupplied, it got too hot. It's still a popular city. It's a great place. You know, like I, I still think that it's going to grow in the long term. It's a very, there's a lot of job growth there.

• 35:51Speaker 00

  And so I do think it will pick back up, but it might take a couple of years. Well, thanks again, man. I really appreciate it. This is really great information and hopefully for all of you who own properties, you can see some of the thought process and the math that goes into this equation. Because a lot of people ask me this question, I don't know if you get this too, Henry, but they haven't like done any of the math or really considered what they would do with the money if they sold. And that's really the whole game, right? At least to me, it's just opportunity cost. Like, yes, it is costing, I am making money on this property, but it could be costing me something because it's not the most efficient use of my money. But I only know that because I've run deals in other markets to see what else I could be doing with that money.

• 36:34Henry Washington?

  Yep. And I think the cornerstone of being able to answer this question appropriately for yourself is having a good understanding of what your short-term and long-term goals are. I think a lot of time, people make decisions and they don't necessarily have their goals mapped out or flushed out. And that could cause you to make a decision that you end up, you know, regretting later on when you do finally flush out your goals. And so said differently, I don't know that you have a terrible option here with this property, which is a good position to be in. But you've got to have your goals mapped out and know where you're going so that you can make very educated decisions with your portfolio that are going to help you get to your goals faster. I mean, you've essentially got this property,

• 37:18Henry Washington?

  which is giving you a big stepping stone into getting to your goals faster. But you've got to, you've got to leverage it the right way.

• 37:25Speaker 00

  Totally. Yeah. And it just goes to show, like, although people say, hey, you shouldn't buy primary residence, bad investment, it can be a good investment.

• 37:32Henry Washington?

  Pretty awesome, actually.

• 37:33Speaker 00

  Yeah, it actually could work really well. I don't know if you've done this. I know James, our friend, James Danard has done this too. Like, if you, if you buy your primary residence, it can be a great stepping stone, especially given the tax benefits Henry was talking about before too.

• 37:47Henry Washington?

  Bought my property in 2020, right before the market popped off. I have a two, 2.3% interest rate.

• 37:55Speaker 00

  No.

• 37:56Henry Washington?

  And about

• 37:56Speaker 00

  Are you serious?

• 37:57Henry Washington?

  Yeah. And about $300,000 of equity myself. So I love this.

• 38:02Speaker 00

  Never get rid of that 2.3%. That's like an heirloom you should pass down to your family.

• 38:09Henry Washington?

  That's the, that's the new family heirloom.

• 38:12Speaker 00

  Yeah. Don't, no watch, no jewelry, anything. Just pass down your 2020 interest rates to your daughters. All right. Well, thanks again, man. And thank you all so much for listening. We'll see you again soon for another episode of the BiggerPockets Podcast.