{"id":84732,"date":"2016-02-03T19:45:57","date_gmt":"2016-02-03T23:45:57","guid":{"rendered":"https:\/\/www.ewmrealestate.com\/blog\/?p=84732"},"modified":"2016-02-03T19:45:57","modified_gmt":"2016-02-03T23:45:57","slug":"do-i-cash-out","status":"publish","type":"post","link":"https:\/\/ewmrealestate.com\/blog\/do-i-cash-out\/","title":{"rendered":"Do I Cash Out?"},"content":{"rendered":"

It is no secret that property values in Miami have been increasing steadily since 2008. \u00a0In the past few weeks I’ve had several people inquire about whether they should sell their home or investment given how much appreciation they’ve experienced\u00a0since the market crash.<\/p>\n

\"active<\/a><\/p>\n

For those with investment properties, the inquiry is usually followed by asking what to do with their proceeds once they sell. Do they\u00a0buy\u00a0another investment property? \u00a0Do they move their money\u00a0into the stock market? \u00a0Or do they simply park it in a more traditional, risk averse savings or money market account until the market softens enough to purchase at a discount? \u00a0For those thinking about selling their home\u00a0the inquiry is usually followed by asking wether to purchase a bigger\/nicer home today, or rent for a while until the market softens again then buy.<\/p>\n

When is the right time? \u00a0It’s a very interesting question and in my opinion, the answer is very different for each individual. We\u00a0are all at different stages of our life and we\u00a0all have very specific and personal\u00a0circumstances and objectives\u00a0to take into consideration, such as our\u00a0current\u00a0income, debt obligations, savings\u00a0targets, current investment portfolio, <\/strong><\/b>family planning\u00a0and other\u00a0short\/long term goals, etc. \u00a0Moreover, assessing an investments property is very different from assessing your own home.<\/p>\n

If you’re reading this and\u00a0you\u2019re\u00a0asking yourself this question, you probably skimmed through several websites discussing tax implications for investment properties, benefits of a 1031 exchange, ROI’s, managing expenses and even changes in retirement age. \u00a0If you’re contemplating selling your home, you’re looking over your property’s market value (probably obsessed with your Zestimate!), curious about how much you can sell or rent your home and what can you buy in return. \u00a0I came across a few interesting articles that I’ve included below.<\/p>\n

In short, everyone\u2019s situation is different and some factors are more important to some than others. \u00a0In my personal and professional opinion you need to look at two\u00a0key\u00a0items first and foremost before jumping into number crunching mode trying to figure out rates of returns, depreciation, capital gains taxes, etc.<\/p>\n

    \n
  1. Do you need the Money?<\/em><\/strong><\/b> If you’re in need of liquidating your assets for immediate cash, then the decision has been made for you, you need to sell. \u00a0If you don’t, then keep that information separate from your\u00a0hold\/sell\/buy\u00a0assessment. Why? \u00a0Ideally, this exercise should be completely independent and mutually-exclusive from your financial situation\u00a0and all the other \u201cnoise\u201d mentioned above. \u00a0\u00a0I understand that ultimately, what you do with your property will impact your personal bottom line. \u00a0Yet, do your best to keep your current situation from\u00a0forcing you to make a bad, untimely or non-economic decision.<\/li>\n
  2. What is TODAY’s market value for your property and TODAY’s market trend (months of inventory) for your neighborhood.\u00a0<\/em><\/strong><\/b>This is naturally your first step: how much is your property worth? \u00a0It is important to look at what can potentially happen in the future. \u00a0Speculate a bit. \u00a0While doing so, take into consideration future developments near your property, new city improvements, retail or commercial changes being discussed, interest rates, absorption rates and even keep an eye on that new neighbor that seems to park a massive company truck next to your house every other day. \u00a0No piece of information is as important as what is happening today. \u00a0Think of it as your balance sheet. \u00a0How much can you sell your home or investment property for today? \u00a0How much can you rent your property for today? \u00a0How long do similar properties take to sell today? \u00a0How much is that new home I want to buy today?<\/li>\n<\/ol>\n

    Once you answer these two questions you will better understand if you\u00a0need<\/em>\u00a0to sell or\u00a0should\u00a0sell and what to expect if you sell today. \u00a0As a real estate professional I can help with the latter; How much is your property worth today? \u00a0How much can you buy another property for?<\/em>\u00a0\u00a0 For what implications selling your home or investment property will have on your personal finances I would recommend you speak to your CPA\u00a0or financial advisor. \u00a0They\u00a0can run a hypothetical scenario based on your current salary, years you owned your property, sales price,\u00a0and overall goals for your money\u00a0and give you a better idea of\u00a0how selling impacts the bigger picture and long term goals.<\/p>\n

    Lastly, assessing the future is more of an art than actual science. \u00a0You’ll find tons of opinions, financial models and forecasts illustrating what the market may or may not do. \u00a0I think is important to read through these, always questioning the source of course, but as an exercise to forecast the market’s\u00a0current\u00a0mood. \u00a0I also think that\u00a0although macroeconomic issues can have severe market impacts (as seen in the 2008 crash), hyperlocal changes will impact your neighborhood substantially quicker and more directly (i.e. a new Walmart near your home as opposed to a Whole Foods grocery store). \u00a0Yet, there’s one single indicator we use as an industry barometer to keep track of what more than likely will happen in the near future in the real estate market; how many months of inventory are available. \u00a0Less than 3 months of inventory indicates a seller’s market. \u00a0If a market has 3 to 6 months it indicates a neutral market with enough properties for both buyers and sellers. \u00a0A market with over 6 months of inventory indicates a buyer\u2019s market. As shown on the graph below (attached), illustrating how many months of inventory based on closed sales Miami-Dade county has had\u00a0in\u00a0aggregate since 2005, you can see how the amount increased substantially during the market crash with over 50 months of inventory. \u00a0Since then, we went down to a healthier 5 months during 2012 and we’re currently in a buyers\u2019 market with 8 months of inventory. \u00a0These figures tend to change as you drill down to specific cities, neighborhoods and even buildings.<\/p>\n

    \"months<\/a><\/p>\n

    If you’re curious about the value of your South Miami home or investment property, how much you can sell it for and how many months of inventory are available in your specific neighborhood, let us know and we’ll prepare a\u00a0complimentary market value report\u00a0along with facts and trends of your neighborhood.<\/p>\n","protected":false},"excerpt":{"rendered":"

    It is no secret that property values in Miami have been increasing steadily since 2008. \u00a0In the past few weeks I’ve had several people inquire about whether they should sell their home or investment given how much appreciation they’ve experienced\u00a0since the market crash. For those with investment properties, the inquiry is usually followed by asking<\/p>\n

    Read More<\/a><\/p>\n","protected":false},"author":5435,"featured_media":130092,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_expiration-date-status":"","_expiration-date":0,"_expiration-date-type":"","_expiration-date-categories":[],"_expiration-date-options":[]},"categories":[12189],"tags":[12175],"yoast_head":"\nDo I Cash Out? - BHHS EWM Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ewmrealestate.com\/blog\/do-i-cash-out\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Do I Cash Out? - BHHS EWM Realty\" \/>\n<meta property=\"og:description\" content=\"It is no secret that property values in Miami have been increasing steadily since 2008. \u00a0In the past few weeks I’ve had several people inquire about whether they should sell their home or investment given how much appreciation they’ve experienced\u00a0since the market crash. 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