Investment property - Keep renting or sell for $ or sell w/ 1031

[Kevin Lanphear]

I’m currently trying to figure out which scenario might be my best strategy for the next 1 to 5 years with this particular property.

I would love to hear everybody’s thoughts on what scenario you would choose in my situation.

Home info

2 story - 4 bed - 2.5 bath - 2038sqft

-$350k current market value

-purchased for $233k in 2021

-remaining loan balance $176k

-Interest rate on loan 2.99%

-My total cash to close down payment when I first bought the house was approx $50k

My current situation renting the property

-monthly mortgage is $1270

-renting for $1900/mo

-prop mgt costs $159/mo

-net cash flow income $400-$500/mo

Scenario 1 - do I keep holding it and renting it out?

Scenario 2 - do I sell it for cash (this will put me in the 32% tax bracket for 2023 tax year total income)?

Scenario 3 - do I sell and do 1031 exchange to buy 2 more new construction homes at $255k purchase price each (which will be roughly $63k in total cash to close downpayment for each home)?

[Dave Foster]

@Kevin Lanphear, Don't give up that interest rate to quickly!  Run the internal rate of return calcs on this property vs a 1031 into two with 8% loans.  You might be surprised what kind of crazy loan amortization your getting now.

If you're really eager for growth then maybe take a second mortgage on that property for a down payment.  It will reduce the performance but retain the amortization of the great loan.  

You don't mention the "why" you would want to get rid of this property.  I usually tell my clients that if there isn't a "why" to get rid of something you shouldn't get rid of it.  Your property is bring ing a healthy cash on cash return with an incredible loan.  It sound's like a good keeper.  But is the neighborhood changing a way you don't like?  Or are there looming cap ex items?  Those are good "whys".