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Updated 12 days ago,
Investor wants to trade properties - seeking advice
I own a duplex that was built in 1989 and has had 2 stable long term tenants with no interest in selling. An investor who is buying the duplex next to mine wants to trade a duplex he owns in a neighborhood nearby so he can have 2 duplexes next to each other (long story no need for those details).
My duplex - built 1989, 2,060 sf, 2 bed/bath, 1 year old roof, value if I subdivide (county already approved) and sell each separately $150k each ($300k total)
Investor duplex - built 1995, 2,300 sf, 2 bed/bath, 5 year old roof, value around $310k
The investors initial request was for an equal trade and they would pay realtor fees, which I replied wouldn't be equal due to buying/selling costs (recording fees, title insurance, closing fee, survey, inspections, loan fees, 1031 fees, accountant fees, repairs), taxes would increase due to new sale price, I'd trade a 3.75% mortgage for a higher one, and I'm on the 10th year of a 30 year loan so resetting that to a new loan would restart amortization and pay more towards interest. I've calculated the lump sum costs to be $9,500 for buy and sell combined and a monthly reduction in cashflow of $347 due to the new loan and taxes. I don't know what his properties rent for yet but lets assume equal rent to my property. No reason for me to go the through the hassle of the sale process unless there is some type of gain which the investor is open to and this is where I need the advice. If I was to trade a $300k house for a $310k house that will cost me $10k and $347/month what amount should I ask for to make up for these losses? I'm thinking along the lines of $30k of equity, so sell me the house at $280k. I'm not sure how to quantify what the $347 per month should be worth in a lump sum amount. Thanks in advance for any advice.