Duplex to 4-plex to apartment building.

[Nicholas M.]

I was curious if this was a thing where a person buys a duplex, does a lil upgrading on it, lets it appreciate for a year or two and then sells it for a profit. Then the person does a 10-31 exchange and rolls the profits into a  4-plex, does a lil upgrading, lets it appreciate for a year or two then sells it for an even bigger profit. then the person just keeps doing that ad infinitum. Does anybody at bigger pockets have any experience doing this? I have a duplex and want to acquire 20 units or more as my goal but saving money and buying more multi-families outright is taking too long cause I just cant save enough. Zillow estimates my house duplex at $256,000 right now which is up $37,000 from the $219,000 I bought it at last year. I could easily use that money plus my savings for the down payment and upgrade to a 4 plex or even a 6 plex. Any thoughts on this? Thank you

[John Warren]

@Nicholas M. this is most definitely a strategy that has been used for many, many years. This is actually the strategy that got me started in real estate investing! You should check out Steve Berge's book The Complete Guide to Buying and Selling Apartment Buildings. The component you are missing in your post that you need to add is the concept of value add investing. You need to find a slightly run down place, fix it up (add the value), and then sell so you have larger equity swings. If you buy retail and wait for appreciation it can take a much larger time to accomplish your strategy as you lose around 7-8% of your properties value every time you sell.