Not that I am affiliated with a group of people with a similar scenerio such as the one about to be presented.. But what would you do if:

Your situation was such that you live in the hottest market in the nation as far as appreciation goes right now; central coast of Florida. You had a house worth 540k @ 2,700 sq f in a gated community, mortgage debt of 300k on the house, orig purchased for 285k. Upscale 3 br condo in your area currently goes for 260k. You were looking to relocate out of FL in 5 yearsish anyhow. There is also about 250k worth of business debt being paid off from money coming in over the next few years, this money would have been from the sale of a business and is pushing your income to the 300k+ range. You were looking to possibly invest in the future, learning over the next five years before moving and retiring into fulltime investing.

I say that these people should sell their house which will pay down the debt right away and their excess money coming in can go to pay off the upscale 3br condo they can (and should) buy for 260k! I figure its w win/ win situation because if the market slows, they already sold their house for a high price and needn't worry about what it could have been worth and that they have extra debt on it, and if the market doesn't slow... Well then their condo appreciates anyway! Plus with no debt the excess monies coming in could be used through a broker on new investment properties... What do you think?

By the way, you people are awesome!

Thanks, in advance, for your opinions! (I hope you think I'm right). =)

-The FL Neophite

The answer would depend on what the goals and aspirations are of the client.... not your goals.

You gave no information from which we could learn what the client wants and needs are.

Bluntly, its my family members, five years want to move north a state or two for retirement. Not my client, I'm about to head off to FSU for business w/ a focus in real estate and am currently taking the pre licensing course over this summer before school. I have been reading all of your posts, so I got the idea to ask this forum, my family member thought asking was a good idea. They want to know what would make sense to a fulltime investor, not that it will affect their decision but they'ed just like to know, I would also like to know because I want to be a full time investor hence I'm interested in what you think.. so I suppose this should have been in 'ask an expert'. sorry! and thanks Realty Check for replying!

From what you mentioned your family had a time table of 5 years until retirement. If that's the case, you would want to be liquid as possible and have your money in very safe vehicles (money market, etc) in order to plan for this short term need (<5yrs away). That would mean locking in gains on home appreciation by selling and putting the profit aside in order to minimize the potential risk. Real estate has generally gone up over the long term, but in the short term it can spike up or down and can be quite volitile in absolute terms...better to capitalize on this spike up than to try to weather a spike down.

The advice I was looking for! Thanks!