{"id":69754,"date":"2025-02-05T14:39:35","date_gmt":"2025-02-05T14:39:35","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/579-i-have-14-days-until-my-tenants-move-in-and-nowhere-to-go\/"},"modified":"2025-02-05T14:39:35","modified_gmt":"2025-02-05T14:39:35","slug":"579-i-have-14-days-until-my-tenants-move-in-and-nowhere-to-go","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=69754","title":{"rendered":"#579: I Have 14 Days Until My Tenants Move In … And Nowhere to Go"},"content":{"rendered":"


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\"PhotoTodd is in a real estate bind. He found out six days before closing on a new home that it wasn\u2019t legally sellable. And renters are moving into his current home in two weeks. What should he do?<\/p>\n

Anonymous is excited about expanding her real estate portfolio. Should she sell her $2.5 million rental property in the Bay Area to do this, or can she keep it and leverage the equity instead?<\/p>\n

Former financial planner Joe Saul-Sehy and I tackle these two questions in today\u2019s episode.<\/p>\n

Enjoy!<\/p>\n

P.S. Got a question? Leave it here<\/a>.<\/p>\n

_______<\/p>\n

Todd asks (at 01:22 minutes<\/strong>):\u00a0 I\u2019m six days away from closing on a multifamily property and just hit a major roadblock. During the final inspection, I discovered that the seller couldn\u2019t legally sell the property because the lot wasn\u2019t divided into two separate units.<\/p>\n

This process requires approval from the City Council, the Planning Commission, and several other committees\u2014something that could take months. Under our contract, the seller is now in default.<\/p>\n

Here\u2019s where it gets tricky: to secure a better mortgage deal, I already rented out my current home, and the new tenants are moving in two weeks. I don\u2019t want to break their lease since they\u2019re excited to move in, but now I have no place to go.<\/p>\n

How should I handle this situation? Should I try to push the seller to resolve this faster, negotiate compensation, or even walk away from the deal?<\/p>\n

Anonymous asks (at 22:00 minutes<\/strong>): \u200a Several years ago, I inherited a residential property in the Bay Area that I own outright. It\u2019s worth $2.25\u2013$2.5 million and for the past few years, I\u2019ve rented it out, collecting $5,800\/month.<\/p>\n

My tenant will be moving out this summer and I\u2019m interested in leveraging this property to expand my investing portfolio. What do you think about the following options?<\/p>\n

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  1. Sell and 1031 Exchange:<\/strong> Sell this property and use a 1031 exchange to purchase two or more residential rental properties.<\/li>\n
  2. Hold and Leverage:<\/strong> Keep this property as a rental, but use the equity to finance the purchase of additional properties.<\/li>\n<\/ol>\n

    I\u2019m leaning toward option two because I\u2019d prefer to hold and add, but I\u2019d like your perspective. If I pursue this path, I assume I\u2019d need to invest outside of the Bay Area due to the high costs here.<\/p>\n

    Additional Context:<\/strong><\/p>\n

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    • I don\u2019t rely on the rental income for living expenses. I\u2019ve set aside $100,000 in a high-yield savings account for emergencies or potential updates (e.g., the kitchen and bathrooms).<\/li>\n
    • The remaining rental income has been invested but isn\u2019t earmarked for anything specific.<\/li>\n
    • My husband and I each have strong incomes, our kids\u2019 college expenses are covered, and our family home\u2019s mortgage is under control. We\u2019re also on track to retire in several years.<\/li>\n
    • I have $500,000 in separate property securities and $5 million in real estate (including commercial properties owned jointly with my siblings). However, I wouldn\u2019t leverage the commercial real estate or any of our community property assets, as my husband is risk-averse.<\/li>\n<\/ul>\n

      If needed, I could tap into the $500,000 in securities, though I\u2019d prefer not to.<\/p>\n

      Given these considerations, what are the pros and cons of selling via a 1031 exchange versus holding and leveraging this property?<\/p>\n

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