Cash-out refinance (VA to Conventional) or 1031 exchange?

[David Navidad]

Hello Team, I have a 4Bed/2.5Bath SFR in Central Texas with a tenant leased til OCT 2022 and a property manager agreement til 2023. It is not cash flowing but I am breaking even because the property taxes are killing me (I guess I'm building equity/appreciation). There's 275k mortgage left (VA loan) and the comps are selling around 400k-420k and Redfin/Zillow estimate it as 390k. I have two questions: Can I sell the property via 1031 Exchange with a leased tenant and property manger? Or should I cash out refinance into a conventional loan and use the equity/VA Entitlement to purchase another property?

My gut is telling me to sell since I don’t see myself investing into Texas anytime soon. I’m currently stationed near Ft Lauderdale but I’m originally from Arizona and would like to purchase a multi family there. Thoughts? I’m a rookie as you can tell. Thanks a bunch!

[John Leake]

@David Navidad I would see what you can do with the money you would get in either option and compare cash on cash returns. The money you would pull out could be significant down payment on a mid size multi unit apartment building. Ask your property manager if they are managing any apartment buildings that the owner might sell to you and see if you can upgrade and get some cash flow.