Buying & Selling Real Estate
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated almost 5 years ago,
Would you 1031 exchange or keep this investment?
My husband and I have not been able to figure out the math on this and I hope that I can get some comments and suggestions from others. We lived in the SF Bay Area and own a townhouse as a rental. It had appreciated about 70% in the past 10 years. We are doing a bit better than break even but the amount is insignificant to be consider cash flow property.
We have some extra cash and have been looking into buying cash flow properties out of state. We have been doing research as it’s a big step for us, in the meantime, our tenant had approached us to see if we are interested in selling the townhouse to them. Now I’m not sure if we should do a 1031 exchange, and roll that into the out of state properties, or keep this longer and maybe find some other like kind properties in the area for appreciation. But even finding like kind in the area are not as appealing since we will have a jump in the property tax we have to pay. It will increase our monthly carrying cost if we do that.
My husband thinks that this is like “cashing out” on the gain and converting it into cash flow each month, and still be able to keep the cash we originally wanted to invest with us to do something else. However, I feel like it is different kinds of investment and the value where it lies is different. Out of state properties does not have the same appreciation rate as we have here in this market but provides good cash flow. And I do want to keep an investment property in the area to take advantage of the unique market here. I feel like selling the townhouse here and exchange into out of state properties is like killing the golden goose and just feed off of what its left.
To be more specific, we are looking into Oklahoma as some of our friends have bought properties there and have connected us with people who does this specifically.
I guess what I want to know is when is it a good idea to do a 1031 exchange? Or when is it a good idea to sell your investment property for something else?