Looking to upgrade; please help!

[Craig Asplund]

I'm look for any advice on advancing in my real estate holdings. We are looking at a few different options: Upgrade rental, Flip (REO auction) or new build. Both me and my partner are hold real estate license (AZ). My partner is a licensed Realtor in Arizona so we get a commission (2-2.5% net) on purchases; I manage the properties. I do not have W2 income so adding cash flowing properties is restricted. So is an equity loan. This is also why I want to move into commercial loans. Please, any input on your behalf would be worth it's weight in gold!

Currently, I have 2 properties:

Property 1:

Triplex (3/1 + 2/1 + 1/1): market would bear $300 increase in rent possible value added on 2 units.

Purchase Price: $270,000

Mortgage Debt: $195,000

CMA: $400,000

25% down: $67,500

Equity: $205,000

CoC: 25%

Property 2:

SFR (4/1):

Purchase Price: $219,000

Mortgage Debt: $180,000

CMA: $265,000

15% down: $32,850

Equity: $85,000

CoC: 20%

Total Equity: $290,000

Option 1: Sell current properties as part of a 1031 exchange, use money as down payment for commercial residential property valued around $1,000,000. Must cash flow above current rate but not expecting to match current CoC. Must have potential value added. Sell at later date with (hopefully) capital gains. BRRRR strategy.

Option 2: Buy at courthouse auction, renovate, sell. BRRRR strategy.

Our current market has low inventory and eager buyers. Receiving offers on homes in under 24h from listing properties. I have seen others with $50,000 cap. gains as of Fall 2016.

Option 3: Work with local contractor and/or land owner to finance a spec home build. Currently have an “in” with a local contractor seeking finance partner.