1031 Exchange or not? Old home for New

[Mike Douglas]

I own a single family home in the Old Town area of Fort Collins, CO that I have a 5.9% Cap Rate on. Currently rented to good tenants. The home was built in 1904. Although the bones are in good condition, there is the potential of expensive cosmetic updates in the future, like concrete work, etc. not to mention more frequent minor repairs than newer homes require and potential of future major expenses like sewer lines, foundation, etc. I also happen to own and rent a SFH in the suburbs with a 7% Cap Rate. Because of the age and upkeep of the older home, I'm considering selling it and 1031 exchanging into a newer suburban home. The thing I can't get past is, the Cap Rate on a newer, less repair-risk suburban home would be around 4%. My question is: Does it make any sense at all to drop 2% cap rate points to swap an older home in need of repairs for a newer home with fewer issues?  Or does it make better sense to stay with a higher Cap Rate property and deal with repairs big or small as they happen?