Should I sell my townhome along with my neighbors to a developer?

Question

Hey folks! I own one unit in a strip of 4 individually owned townhomes. We are seeking offers from developers/investors to purchase all 4 units. We are all on board with this for the right price. Each unit produces excellent cash flow as-is, and the home values have increased by %50 since 2020. With so much development in the neighborhood, it should be a great opportunity for the right investor to acquire the full plot of land near Downtown Nashville.

Should I sell or hold, and what is the best way to find this type of buyer?

Should I sell or hold, and what is the best way to find this type of buyer?

Ashley Gill · Answer

@Matthew McQueen I can see how this could be an opportunity to capitalize on your investment and diversify your portfolio! If you feel it is the right time to pull out, go for it. Keep in mind, there is a reason someone is willing to pay a premium. Again there is no wrong answer here. With Nashville continuing to grow, many will get pushed to neighboring cities! Investing in those areas now will likely put you ahead of many others in the market!

Luka Milicevic · Answer

@Matthew McQueen

I would not sell. Cashflow is rare in our market and you found it.

If you want to tap the equity I'd do a HELOC. It probably doesn't make sense to refi right now because of the rate you have vs the one you would get.

When you sell, you have a tax obligation now. Sure you could 1031, but then you are only deferring your taxes and you now HAVE to buy something in a short amount of time, which could potentially lead you to make a desperate investment decision vs a good one.

You'd be selling a cash flowing asset, and now you have to find something "better" in a market that is priced close to the moon with interest rates even higher.

With the limited info I have, I don't think I would sell without a specific investment already lined up.

Min Zhang · Answer

Hey Matthew,Deciding whether to sell or hold onto the property depends on your investment goals, financial situation, and personal preferences.You can advertise online, connect with investors through clubs or events, or get in touch with neighborhood real estate brokers or agents who specialize in commercial properties to locate purchasers.Let me know if this helps. Have a great day!

Matthew McQueen · Answer

@Ashley Gill - Thanks for the insight!!

My original plan has been to hold the property for long-term appreciation and monthly cash flow. However, if there is an opportunity to receive a premium (above market value) for the sale of all 4 units as a group, the thought is, I could collect on several future years of appreciation early. This is currently my only investment property, and I would be looking to re-invest in multiple cash-flowing properties (likely in a different city). While I'd be sad to leave the Nashville market (my hometown), I see this as a springboard opportunity.

Matt Marcus · Answer

I’d agree it depends on your goal.

Do you want to cash out and use the cash in another larger project?

Do you want to bring the land as equity to the deal ?

Or do you want to keep cash flow?

Also, message me as I have an investor pool that would interested in this for development.

Ashley Gill · Answer

Hi Matthew,

I believe it depends on the specific area of Nashville and your reasoning for selling. Can you elaborate on your thought process here? It sounds like you are wanting to sell due to your current equity and home value. Do I have that wrong? Have you thought about where you are going to reinvest the money? There is no right or wrong decision - only the right decision for you.

For us, downtown is already a cash cow, and I would not sell any time soon. Since 1991, Nashville has grown year over year at at-least 1.5%. In fact, the majority of those years were between 2% and 2.8%. Many articles are suggesting Nashville is going to be the tech hub of the south. Unless the issue of public transportation is properly addressed, I do expect Nashville's growth rate to cap out eventually; however, I still think we have quite a bit of time before we get there!

Should I sell my townhome along with my neighbors to a developer?

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