Growth Strategies/ Sales of Current Holdings to Larger Properties

[Michael Willis]

I am a long time real estate investor who invested in Jersey City NJ before it was ultra hot in '97.  I am looking to take my real estate holdings to the next level but debate my best next move. I have a 3 family and condo both bought before 2005. There is quite a bit of equity in them, probably about 1.5m and I have about 200k in cash in hand. Looking for suggestions and ideas. I already make great income from the investments but would like step up to the 2-4m range (using sales proceeds as down payment) with a net income of at least 175k. My challenge in buying a new property will be current income with all my write downs. Thank you in advance for your thoughts.

[Dave Foster]

@Michael Willis, You're not way out of line in your wishes.  With the information given I have to swag a little and back in to a number.  But if you're wanting $175K of income with 1.5m of equity then considering an avg cost of financing you're probably needing to  look at a 7 - 7.5 cap rate.  Maybe a little higher.  That dog can hunt in a couple of markets and sectors.  The issue of you getting financing is more problematic.  

One addl thought to consider.  Right now NJ does not have a 1031 claw back which means that if you 1031 out of state you will defer those gains as you leave NJ.  And if you buy in a state with no income tax and later sell you can eliminate the state capital gain in total. if you just follow I-95 and come on down south and set up FL residency.  There's no income tax on that 1031d florida property (or TX, NV,WY, WA, and AK).  That can add a lot to both your bottom line and your tan line.