Sell hot Real Estate now to buy Snp Index?

[andysandp]

Real Estate in Boston is hot, SNP Index is hot.  Should I sell my Real Estate to buy SNP index now?   Or wait until there is an SNP crash and then sell the Real estate. 

Since you can't time the market isn't it better to sell Real Estate now?

[alanB]

If you are happy with your current asset allocation don't sell.  If you think you have invested too much in real estate sell right now.  Presumably this real estate is producing income and you are not going to just move to a different house in the same area, correct?  Otherwise the question might be better stated "should I invest my home equity"

[Heckler]

Is this andyre or andysandp??

[anisotropy]

Is this andyre or andysandp??

pro!

[andysandp]

If you are happy with your current asset allocation don't sell.  If you think you have invested too much in real estate sell right now.  Presumably this real estate is producing income and you are not going to just move to a different house in the same area, correct?  Otherwise the question might be better stated "should I invest my home equity"

Sorry, to clarify, I currently live in a rental and don't own a home.  My Boston Real Estate is an investment property.

My Rental income barely covers my Mortgage and Expenses, but has appreciated more then 30 percent since I bought it a few years ago.

Thoughts?

[Mr. Boh]

What other assets do you have?

[cavinvestor]

If you are happy with your current asset allocation don't sell.  If you think you have invested too much in real estate sell right now.  Presumably this real estate is producing income and you are not going to just move to a different house in the same area, correct?  Otherwise the question might be better stated "should I invest my home equity"

Sorry, to clarify, I currently live in a rental and don't own a home.  My Boston Real Estate is an investment property.

My Rental income barely covers my Mortgage and Expenses, but has appreciated more then 30 percent since I bought it a few years ago.

Thoughts?

If the rental income is covering your mortgage and expense then why sell it?  You may not be making huge cash flow but someone else is building your equity.  If the property is very old and you don't see that growing in the next 5-7 years then you can start having an exit strategy now.  But if it is type B neighborhood and fairly new 1980+.  I don't think it is a good idea to sell - especially to buy S&P.

[Eric]

Andy, if any of us could accurately predict the future, we sure as shit wouldn't tell you or anyone else about it.  We would use that knowledge to make hundreds of millions of dollars instead.

Personally I would sell a rental that doesn't cashflow because it's simply not a great investment, and I'd rather sell it and take the risk of a stock market crash than keep it and take the risk that you can't find renters or need to rent it for a lot less then you're currently doing because of a bad economy.  Because if there is a major S&P market crash, you can bet that the real estate market will be affected too, since stock markets don't simply crash for no reason.  That happens in connection with poor economic outcomes.

But either way, no one knows what the right decision is.

[ChpBstrd]

Either your Boston real estate or the S&P could lose half its value in a matter of days or weeks. Another poster here had a subsidized housing tower announced to be built next door to his property. Talk about the benefits of diversification!

One difference is you can buy put options on SPY but you cannot fully protect your investment in RE. If you feel both are at a peak, the S&P would be preferred because it is hedgeable.

[andysandp]

I understand Real Estate can come down when SNP index crashes, but in 2000 and 2009, Boston Real Estate didn't go down much, maybe 5%.

Real Estate prices move slower then SNP index.  They don't drop 25-30% in weeks or even months.

So I'm thinking if I hold my Real Estate, and if if SNP drops 35%, then sell the Real Estate to buy the SNP index at a good sale.   One problem is people said you can't time the market, and maybe SNP never drops 35% in the next few years.

Or I could sell my real estate now, (I almost doubled by down payment in 4 years after fees) and buy SNP index.  People are saying SNP index is high, but you can't time the market.

Trying to brainstorm to get both sides of the argument.

Thanks!

[BTDretire]

My Crystal Ball just rolled under my bed, give me a minute.