Strategy Check: Moving Markets

[Shawn Massengill]

Hello Everyone,

Long time lurker and I have learned a lot from this place! 

However, we are about to make some moves and are hoping we are making the right decisions! We (Spouse and I, 41/45) bought our first rental in 2007. We added 2 more between 2007 and 2012. They have all 3 been rented continuously with only the standard upkeep issues to deal with. We have built up some sizable equity because of this.

That being said, we are now in a position to relocate and have chosen Florida for many reasons. I landed a great job a couple of years ago that allows me to work remotely and make an excellent salary, also my wife will be re-entering the workforce after taking a few years off with our last child.

We are now under contract on that first home and will be closing in 2-3 weeks. We are 1031 exchanging this property and are in the process of identifying properties in the Orlando area. 

Now, this is where all the options start to confuse and overwhelm but here is what I have been looking for:

We do not want to go nuts but we are looking to buy 2 properties with the proceeds from the sale in Utah and will have about 125000 per property to put down. We want the mortgage low to maintain cashflow and want to limit the pain of moving to a new market, so we are targeting Tenant occupied properties in the 150000-200000 range.

Is that a good strategy? Would you employ a different strategy? Any thoughts are welcome!

My thinking behind this is that we are planning to 1031 all our rental properties over the next year or two. We will be relocating our Primary Residence in mid 2020. We want to build a cashflow base to expand on as we progress. I am looking at these new properties in Orlando as 'seed' properties and plan to leverage the equity to expand/upgrade after about 5 years. 

My goal in reaching out to the forum today is to gather other opinions, let you poke holes in my logic, and hopefully come up with the best plan moving forward. I realize I am far from an expert in this but have had success with rentals, built a lot of equity, and now want to leverage that equity to expand my rental profile.

Thank you for taking the time to read this and I look forward to reading and responding to any thoughts/ideas this community may have.

Best Regards,

Shawn

[Amy Kendall]

@Shawn Massengill You should be able to do your exchange to multiple properties as long as the total exceeds the previous property.  It sounds like you have a good problem.  My husband and I have been debating selling some of our older properties as well and exchanging up.  We are looking to trade up into more expensive multi-family properties, but I have really enjoyed the single family homes we have.  With that amount of equity, you could look into multi-family housing and probably match or exceed your cash flow.  We are actually looking into the Florida area as well and will be closing on a new fourplex in Ocala here soon and one in Jacksonville probably early next year.  They both will cash flow pretty well.  I like that I am increasing the overall value of my portfolio through leverage while maintaining good cash flow.  Just something to think about.  Either way, you should turn out fine.  Best of luck in your move and selling off the properties!