Keep Current Condo or 1031 for better margins?

[Paul Ellington]

Hi BP forum,

My wife and I recently moved in to our first single family home and stumbled our way in to real estate investing after house hacking our condo and keeping it as a rental property. With high HOA fees we break even every month on the property and are hoping to increase the rent next August. With a property that is appreciating well and is a break even property, would it make more sense to do something like a 1031 exchange and look for a better property like a SF or townhouse for a better ROI? Another option would be to hold on to this property and potentially use the equity for a down payment on another property some day. Any advice is greatly appreciated. We live in Northern VA for anyone who knows the market. Our condo is a 2B/2BA in Tysons Corner with a ton of new development and looks promising from an appreciation standpoint but that's a gamble considering all expenses aside from mortgage, HOA, and utilities will be on us.

Thanks!

[Dave Foster]

@Paul Ellington, if you lived in that property two out of the previous 5 years you can sell and take the first $500K of profit tax free.  No need to 1031.  That's the move I would make.  Appreciation often turns into dreams of sugar plums.  And you've got the opportunity to sell tax free now.  Use the cash to better your position or purchase more real estate.  Whatever you want.