Newbie trying to make sure my thought process is sound re: 1031

[Jer Yeung]

Hi - I am somewhat of a new investor; my only real estate "investment" up until a few weeks ago was a condo that I bought, moved out of, and rented out.  Since then, I've built out my stock portfolio and have been working on my primary business, which I have no intention of leaving, but have been looking at putting idle capital to use in real estate.  

Recently, I purchased my first property through Memphis Invest, and I'm making what I feel is a good return for being completely hands off, and I think it's great.  I don't have the expertise or understanding to build a team out of state, and locally in Los Angeles nothing makes sense from a cash flow perspective without doing a huge value add (again, that is a space where I lack expertise - without even considering that I don't have the time).

My thought process is this - my condo that I've had is break even from a cash flow perspective - this is without factoring in anything for vacancy, repairs, etc.  I've been fortunate to have great tenants, but not budgeting for those things is silly.  I could sell the place and double down with Memphis Invest on a few properties via 1031 exchange, and have each of them cash flow and get me what amounts to a good return cash on cash after factoring in depreciation and my current tax bracket - AND it would be hands free and actually passive. 

I'd lose some of the appreciation potential, but I'm not in it for the appreciation as much as I am in it for stable returns, so moving out of the LA marketplace doesn't bother me.  I'd go from a single property that I manage that doesn't cash flow in an appreciating market to multiple properties that are cash flowing positive (and passive) - both diversifying and reducing the amount of work put in on my part.

It seems like a stupid no brainer as I type it, but I am looking to touch base with the BP crowd to see what I'm missing, or if I'm on the right track...

Thanks in advance!

[Dave Foster]

@Jer Yeung, The classic play is appreciation early in a market and cash flow late in a market.  Appreciation is not straight line.  So positioning yourself during a flattening appreciation curve into better cash flow is a sound move.  If there's a correction you're covered.  And if the market turns again you sell again back into an appreciation market.  All made possible by the tax deferral of the 1031 exchange :)