Santa Barbara County multifamily - Should I stay or should I go??

[Heather Luikart]

We’ve bought three properties, but this would be my first time selling, looking for advice from seasoned investors.

We own a 4-Plex in Solvang, which we purchased for $850k at 3% (25% down), appraised at $1m when we purchased in 2020, now we believe we can get over $1.3m for it. Not much room for expansion other than adding on a 2nd story, but it’s right in the heart of town.

Do we sell!??

Is it going to drop in value? I’m hearing yes maybe a little but not back down to 2020 prices.

If we bought a replacement property, we would be buying in at 6% or more (and paying tax on the gains unless we can 1031 exchange in time), and with the 3% loan we currently have we are making $1,600/month net profit. Given the increase in equity, we can afford more property with a re-purchase, but with current inflated prices we wouldn’t actually be getting any more property for the extra money, right? Plus I don’t think we could make that kind of margin on a re-purchase at the same price.  Are rates ever going to come back down?

Any advice is appreciated!