Should I move on from a good cash flowing property?

[Mike Pastoor]

First time poster with what may be a fairly basic question.

I own a duplex which over the past 7 years has doubled in value and cash flows about $350 per unit per month. While this is good, the downside is the area may be in decline and recently had a group-home start next door.

I’m not sure if I should keep a good cash flowing house, or do a 1031 and move into a different area and risk losing the same cash flow. I’d really appreciate input as this is my first property and I’d like to buy more but not before developing a strategy for this property first. Thanks in advance.

[Chris Levarek]

@Mike PastoorAlways a good idea to review property returns. In order to help with this question, it helps to understand the velocity of money and return on equity. For velocity of money, is your capital or are your assets working as best as possible for you? For return on equity, what is your equity in the property giving you as a return?

To calculate return on equity, divide the cash flow  /  equity in property = Return on equity

Now can you achieve a better return on equity in another property? If yes, then move on to another property with same equity, if no then hold the property. 

Check out additional posts on the subject : 

• what-is-your-return-on-equity
• roi-vs-roe-when-to-re-evaluate-a-rental-property
• return-on-equity---analysis-and-strategy

Hope that helps!