Should I sell my Colorado rentals and invest somewhere else?

[Mark Ferguson]

I have 15 rentals in Colorado that I have bought over the last five years. Most of the houses I purchased from $80k to $130k, made repairs and rented for $1,200 to $1,600 a month. 

I looked at my last couple of purchases and my quality of property is decreasing. Prices have basically doubled in the last four years. Rents have increased but not by nearly as much as prices. 

Now I am lucky to buy a house for $165,000 that needs $15k in work and rents for $1,500 a month. That is finding a smoking deal. 

So I have decided to buy out of state. Florida has really caught my eye. The next question becomes do I keep my rentals here or sell them and exchange into new properties elsewhere?

I figure I have 1.3 million in equity after selling costs in my rentals and they bring in about $7,500 in cash flow a month. Great cash flow for what I bought them for, but not ideal for how much equity there is now. 

So is it worthwhile to sell some of my properties or all of them here and buy new rentals using 1031 exchanges elsewhere with better cash flow? If I can find good financing I should be able to buy 3 new properties for every property I sell. That would get me to my goal to buy 100 much quicker! 

[Jay Hinrichs]

@Mark Ferguson  like to throw some other ideas out for you to ponder.

1. most folks that sell in high value areas for low value areas over time usually regret it. you got in at a good time.. 

2. take your positive cash flow and target one property and pay it off in a year.. keep doing that until your CO is free and clear your cash flow goes way up then.

I just look at all the property I owend in the SF bay area .. I did not need to sell when I did had I kept it ( bought when I was late 20 mid 30's.. now 60.. my equity would be off the charts .. I suspect the same would happen to you as well.

its not like you need the cash flow to live ( as I think you have a robust RE brokerage business that probably pays your bills) and your exotic car 's  :)

Or ,

Sell it all now and pay the small cap gain tax and then use those funds to match up to a facility and start lending... you could get 2 to 1 leverage so .

1.3 nets you 1mil  1 mil leverage ( I use to leverage 4 to 1  but say today its 2/ to 1) now you have 2mil to put out in your local market at a conservative 15%  thats 300k a year Net cash flow minus 60k for your 1mil borrowed net 240k a year plus you can be in cash in any one 12 month period if you needed to... so this triples your current cash flow.

Do some equity deals on your loans and you may make 500k with those same funds.

Take some of the rentals.. sell them and 1031 into premium timber ground in the northwest.. No cash flow but 12 to 14% Net yields all day long set it forget it for 25 years sell for big dollars.. 

there ya go a few things other than the obvious..   But I would be very reluctant to give up on your Denver rentals that you bought at the bottom of the trough.  then buy rentals in FLA for double what they were selling for 36 months ago.