What to do?

Question

I've got two homes that we bought 50cents on the dollar brand new.  Paid 210K for both value approx 400K.  Cash flow 400 for both.  I'm thinking about selling (1031) and putting into some properties that cash flow greater.  What are your suggestions?

Gary Hurst · Answer

Loans, total balance now is approx 230K we re-fi one to take some cash.

Yes owned them two years now.

Rent is $1300 each.

Cash flowing about 350 per month.  I think I could take the 70-80K after sale and invest in some other properties to cash flow more.  These home are in a very nice subdivision so they may appreciate more than others.  But, I think I'd prefer more cash flow.  Thanks

Joel Owens · Answer

Hi Gary,

I am missing some info here.

So you bought 2 SFR houses for 50 cents on the dollar for 210k. Did you pay all cash or were there loans on these properties and you put some down??

Have you owned the properties at least 12 months?? For 1031 exchanging there is no set time limit but when you talk with 1031 companies 12 months or longer seems to be the safest bet where the IRS will not try and move to disallow the exchange. The IRS generally states for 1031 the property needs to be held for investment purposes and not resale purposes. 1 year is usually the baseline most go by.

Now how much gross rent are you charging per house per month currently??

You could go into a large apartment building, other houses, triple net leasing, other facets of commercial, etc. Really a lot you could do but it would be helpful to everyone wanting to respond for you to include more detail on your goals. With extra yield comes extra work so a lot will depend on how much time you have and how much risk you want.