Making the Most of Rising Property Values

A Conversation About Selling, Refinancing, and Renting

I've been having many conversations lately with clients looking at their property values and wondering, What's the best move? Should they sell and cash out? Refinance and pull equity? Or maybe rent it out for some passive income?

There's no one-size-fits-all answer, but I always emphasize the importance of understanding your goals before deciding. This is your property, your investment, and your future. So, let's discuss the options and determine what aligns best with your objectives, putting you in the driver's seat of your real estate decisions.

Selling: Is It the Right Time?

First, selling can be a great option if you're looking to capitalize on appreciation and move on to something new. But I've seen too many people make the mistake of pricing their homes too high, thinking they'll squeeze out every dollar. The reality? Overpriced homes sit longer, and sellers often drop the price later, sometimes for less than they would have gotten if they'd listed it right the first time. But fear not, there are strategies to avoid this pitfall and ensure a successful sale.

If you're thinking about selling, here's what I'd recommend:

• When considering selling, the first step is to get a realistic market valuation. This should not be based on what your neighbor sold for but rather an accurate apples-to-apples comparison. Make minor strategic upgrades—things like a fresh coat of paint, updated lighting, or landscaping can add serious curb appeal.

• Consider capital gains taxes—if it's your primary home, you may be able to exclude up to $250K (or $500K for married couples) in profits from taxes.

And if this is an investment property, let's look at a 1031 exchange, which enables you to roll your gains into another investment and defer the taxes. That way, you're keeping more of your money working for you.

§  One big takeaway? If you're thinking about selling, don't just look at the price—consider the total financial picture, including taxes, fees, and where you'll reinvest that money.

Refinancing: Tapping Into Equity Without Selling

Refinancing could be wise if you like your property and want to hold onto it but need access to cash. Many of my clients have built up serious equity thanks to rising home values, and they're using refinancing to free up money for renovations, debt consolidation, or even investing in another property.

One strategy I've seen work well is the BRRRR method—buy, Rehab, Rent, Refinance, Repeat. It's a great way to scale up a real estate portfolio. You buy an undervalued property, renovate it to boost its value, rent it out to cover costs, refinance based on the new value, and pull out equity to reinvest.

But refinancing isn't for everyone. A few things to think about:

• Interest rates—Refinancing might not make sense if they're higher than when you first got your loan.

• Your financial picture—Lenders will look at your credit score, debt-to-income ratio, and rental income if it's an investment property.

• Cash-out limits—Most lenders won't let you take over 80% of your home's value, so you'll need to run the numbers.

§  If you're unsure whether to refinance or sell, What's your long-term goal? Do you need liquidity now or want to keep your investment growing?

Renting: Generating Passive Income

Maybe you're not looking to sell or refinance—you want to turn your property into an income stream. Renting can be a great way to do that, especially with rising rental prices. But being a landlord isn't for everyone. It takes work, and it comes with risks.

Here's what I tell my clients who are thinking about renting out a property:

• Know your local market—What's the demand? What are comparable rentals going for? Will you need to adjust for seasonal fluctuations?

• Factor in all costs—It's not just about the mortgage. Consider maintenance, property management fees (if you don't want to deal with tenants), insurance, and potential vacancies.

• Understand the laws—Every state and city have different security deposit rules, lease agreements, and tenant rights. Make sure you're compliant.

If you're in a tourist-heavy area, short-term rentals (like Airbnb) might bring in even more revenue, but be aware—some cities have restrictions on short-term leasing, and HOA rules might limit what you can do.

The key to making renting work is treating it like a business. This means running the numbers, planning for expenses, and not assuming it'll always be smooth sailing.

Regulatory Compliance: A Must for Investors

If you're an investor working with multiple properties, pooling funds with others, or considering raising money to buy more real estate, you must be mindful of SEC regulations.

Real estate syndications, private investment funds, and crowdfunding ventures often fall under SEC oversight, which means:

• You may need to register your investment offering (or qualify for an exemption under Regulation D).

• You have to disclose risks to investors—transparency is key.

• There are strict rules about how you market investment opportunities.

I always tell clients about becoming more prominent in real estate: before you start raising capital, ensure you have the correct legal and financial structure.

§  More on this: JMCO

So, What's Your Next Move?

If you're looking at rising property values and wondering what to do next, my best advice is this:

§  Sell if you want to cash in and move on.

§  Refinance if you need liquidity but want to keep the property.

§  Rent if you're looking for long-term income and appreciation.

Whatever path you choose, the key is to make an informed decision that fits your goals. If you're unsure, let's talk. I'd happily walk you through your options and help you take advantage of today's market opportunities.

Disclosure

The information provided in this article is for informational purposes only and should not be considered financial, investment, or legal advice. Any investment in real estate involves risks, including market fluctuations, liquidity concerns, tax implications, and regulatory compliance requirements.

Duncan Williams Asset Management and David Scully do not provide legal or tax advice. Before making any investment decisions, individuals should consult with their financial advisor, tax professional, and legal counsel to determine suitability based on their specific financial situation and investment objectives.

Real estate investments, including sales, refinancing, and rental properties, may be subject to federal and state securities regulations. Certain real estate investment structures, including syndications, real estate funds, and pooled investments, may require registration with the Securities and Exchange Commission (SEC) or qualify for an exemption under SEC rules such as Regulation D or Regulation A. Investors should conduct due diligence and review all offering documents carefully before committing to any real estate investment.

Past performance is not indicative of future results. All investments carry risks, including potential loss of principal. Duncan Williams Asset Management is a Registered Investment Advisor (RIA) and abides by SEC and state regulatory guidelines. Registration does not imply a certain level of skill or training.

Sources

·  Pricing a Property Correctly When Selling
https://www.thetimes.co.uk/article/price-a-property-high-and-watch-it-die-7mntgzrdf

·  BRRRR Method for Real Estate Investing
https://dominionfinancialservices.com/the-brrrr-method-a-strategic-approach-for-real-estate-investors

·  SEC Compliance and Real Estate Investment Regulations
https://www.jmco.com/articles/real-estate/compliance-requirements-real-estate

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