NEW REI in need of helping developing unique strategy

[Clayton Crouse]

I'm a newbie in REI but have owned a few properties here and there as rentals, but never considered myself an Investor. I have a relatively unique situation and wanted the BP pipe hitters to help me out.

I own, outright, a condo in ABQ, NM, which cash flows at $675/month, rented to reliable tenants with next to zero issues for 3 years now.  Condo is appraised at $150K.

However, That $150K in equity is sitting there unused, at a relatively low rate comparable to multiple strategies I've seen reading Brandon's books and his strategies and seeing deals across the BP forums.

As a new investor I see a few options but wanted to get your valued opinions.  Should I:

1) Trade up vertically using $150K towards Commercial Multifamily (5+)

2) Trade across horizontally to multiple Smaller Multifamilies (4-)

3) Hold what I have and put my savings (Approx: $80K) to work for me?

4) Mixture? 

5) Don't stone me as a new investor, but should I look into a 1031 Exchange to defer the taxes?

I know I didn't give you guys a ton of other intel but I'm hoping to build a strategy to maximize the 4 wealth generators, because as of now I am only using 3 (no-debt service pay down).

Thanks and have a good one. 

[Dave Foster]

@Clayton Crouse, a good team around you is key to any analysis and acquisition strategy.  the only thing that complicates it with a 1031 in play is the constrains of the timing, in particular the 45 day window for identification of your replacements.  Your actions are identical with or without the 1031.  Its just how fast you have to move.  and that's what a good team is there for anyway.

I would never counsel selling a good producing asset that is in a good condition and your analysis projects good things for the future.  In that event i'd access financing, keep the asset and grow through refi.

However, if your projects show anything like a decline in cash flow, attractiveness, future appreciation, or an increase in capital expenses then a 1031 is exactly what you need.  The 1031 allows you to change type location demographic and size of real estate without paying the tax on gain from the sale that allows you to change.  A well executed 1031 leaves you in a better position with less risk and a more attractive investment in your portfolio.