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Which Properties Should I Keep and Which Should I Sell?
Joe: Hey, it’s Joe Crump. Which properties should I keep in my portfolio and which should I sell? So much of it depends upon where you are in your life. Are you getting close to retirement? Do you have a long time to retirement? Do you want more leverage? Do you want less leverage? You know, you probably don’t want as much leverage as you’re getting closer to retirement. You want more leverage if you’re farther away from it when it’s not going to matter as much as long as you’ve got enough reserves to be able to protect yourself when you have vacancies or need repairs. But leverage will make you more money as long as you don’t go under. So there’s more risk when you take more leverage.
Joe: So deciding which properties that you should keep in your portfolio, you want to find a balance. I have properties, really cheap properties, properties that we bought, well, actually properties that were given to me. I would take them over and then we’d go put $20,000 or $30,000 into them and then they’d be worth $60,000 or $70,000. I’ve had properties like that. There’ll be properties that I’ll buy for $50,000 that we’ll put $10,000 into and they’ll be worth $100,000. We have properties that I bought for $150,000 ten years ago that are now worth $250,000. I have properties that I bought for $250,000 that have also gone up in value and I’ve bought down over the years.
Joe: So you buy a diverse group of properties and you make sure that you know when you’re going to need that money out of that property. You’ve got to know your exit strategy and what the plan is for the future.
Joe: Also when you’re building your portfolio you want to put some properties outside your Roth and some properties inside your Roth that you purchase in your Roth so you have tax free money when you retire. But on the outside of your Roth you have money that’s going to bring you income. If you want to retire early, you want to retire when you’re thirty-five instead of sixty-five you can do that if you have properties that are outside your Roth. You can still have income that’s coming in on those properties. You can have those properties paid off in four or five years in most cases and have cash flow on properties within the first month of the property. Plus you can flip properties and get your lease option fees so that will give you cash flow as well.
Joe: So depending on what you’re trying to create, whether it’s cash flow now, income later, you have to make that decision before you decide how you’re going to build your portfolio. And then you start building your portfolio and going after, targeting, those types of properties that are going to fit your needs. And what I think you’re going to find over the years is that you’re going to be buying all different types of properties using these zero down structures, subject to, multi-mortgage, land contract and cash. And by using all of those different methods of purchasing you’re going to be able to build you know, an attractive portfolio that ultimately pays for itself, pays itself down and goes up in value over time.
Joe: All right. I hope that helps.properties.