Selling High or Keeping a Great Property?

[Nick Vought]

BP Family! 

I am reaching out to all of you to help me try to solve this cross road I am at. 

I currently own a Fourplex that I had purchased 2 years ago for 450k with an FHA Loan. I do not have a lot of equity in the property, but have updated one of the units. I am currently cash flowing about $1,200 with possibility for more when the other units are updated.

Right now in the Salt Lake City area properties similar to mine have been selling between 650k and 750k most of which do no get the amount of rents I get and our older properties. Side note this all being said, if I got an appraisal it would most likely come in closer to 550k-600k.

I have always wanted to do the BRRRR method to be able to purchase more properties faster.

So my question is this, should I keep the good property I have and just slowly try to purchase properties with money I have saved and private money OR should I sell my place and 1031 exchange into a property I can put 20% down, rehab, refinance and repeat?

Any input would be greatly appreciated!

[Wes Johnson]

@Nick Vought if you currently have limited equity, have $1,200/mo. cashflow, and have three more units that need to be updated, consider:

What is your investment objective? A portfolio? A flip? A combination?

Do you truly consider this a good property? If so, see what you can do to keep it and enhance your cashflow with as minimal cash outlays

Do a sensitivity analysis. Softening of markets tend to pull down top of market properties. If there was a 10-20% correction in this neighborhood, would a rehabbed property be towards the top of this market? What would the rehabbing cost, and how much would you expect cash flow or resale to increase?

3.2% ($14,400 on $450k) is not a massive margin, but it is something. Selling or exchanging with real estate brokers or attorneys will also cut into your topline profits, are you okay accepting this as well right now? If this is an easy property, you might consider saving the cashflow for a year and re-evaluating this decision in a year.

Best of luck, and remember, there are multiple right answers, depending on your goals and timeline