Porter

From Page 7 of return of 3.65% per year on their $630,000 investment. This seller was not in distress and had substantial equity, but the buyer made him an offer he couldn’t refuse.

I am pretty sure I own some Invitation Homes stock and honestly have nothing against them, but I do have some advice as a stockholder. Now would be a great time to sell some of these old houses and do some 1031 tax-deferred exchanges into some new profitable real estate investments. Take your huge profits on some of the ones you bought at the low from 2010 to 2014 because now you are only making a 3 to 4% net rate of return on the rents and the market values are likely to only increase 1 to 4% per year over the next five years.

Roofs will begin to leak, and tenants will continue to need repairs and improvements. Exchange your capital gains into some land and build some affordable housing or buy an entire new subdivision to rent out like we have seen done in Florida. It is now a seller’s market and I think your stockholders are not going to be satisfied with a 3 to 4% rate of return when they can get 4% in government bonds and not have to fix any toilets, deal with evictions and California politicians.

Get out now while you can and be sure to list the homes with local Realtors or sell the homes to your tenants and let them use local lenders!

Jim Porter, NMLS No. 276412, is the branch manager and senior loan adviser of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.