Here’s a look at your equity strategy.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We started a conversation that I really want to play out because we’ve got a guru in the topic. Bob Nelson has taught so many people on how to take the information that they have, with the resources they have at an earlier age, and over time leverage their position to have beautiful equity and passive income at retirement.
Bob Nelson: Well, and it’s interesting because there are a number of people that do have, by virtue of increase in value in the asset that they acquired. They’ve got increasing large equities. And the question then comes, if I have, say, a 50% equity position and 50% debt, what would I do with that? Do I just sit there and wait for it to become free and clear? For some people, maybe yeah, but for those that are a little more aggressive and listened to my concepts, you may want to harvest a portion of that equity and do something with it, more productively.
Marcia Edwards: My fear, and I would think it’s fear of others, is that equity real, because of course it depends on the timing of when you sell, whether that was really the game that you enjoyed and experienced, or was it just a moment in time that we peaked in the equity position we thought we had.
Bob Nelson: Right. And that’s particularly true. I’m dealing with a transaction at the moment with some individuals that were thinking in terms of selling a large apartment complex. And I was very reluctant to talk about it, but this is the top of the market, and if you’re thinking in terms of holding for three or four more years, some really… not real positive things might happen in that particular case where you look back and think, “Man, I should have done it now.”
Marcia Edwards: You’ve got to take a look at the whole picture, but let’s say you have 50% equity in a duplex that’s at 400,000. So, you got 200,000 in equity sitting there. Should you let it sit? And I know I’m overgeneralizing, but how do you look at that as a conversation?
Bob Nelson: Well, it depends. It depends on how old you are, how aggressive you would like to be. If you say, “Hey, I got it made. Just make sure that I keep it. I got it made position.” Then maybe we do just simply sit there with that equity position, dedicate the majority of the cashflow to paying down that loan to maybe to a point where it’s free and clear.
It’s all a function of who are you, and do you own enough that if you did own it free and clear, that it would be able to support a lifestyle that you would like to become accustomed. If not, you need to harvest it and do a placement of a portion of it, or maybe even all of it, in other type of real estate income properties.
Marcia Edwards: We’ll talk about the young and the aggressive next program.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.