Sell Stable SFHs for Older Multifamily?

[Dave Michael]

Good Morning BP,

I have two rental properties in Colorado Springs, and I am trying to brainstorm ideas of what to do going forward. I have somewhere between 150k-200k equity between the two. The first one I owe $350k, worth $450-470k, cash flows $900. The second I owe $450k, worth $550k, cash flows $700. Both houses are relatively new, no renovations needed. There is a new amazon facility in Colorado Springs, but I am not sure how much more appreciation the region will experience. The cash flow for the equity isn't the best, but it is a decent return.

With the end goal in mind, I am working towards owning large multifamily real estate. I want the shortest path possible towards acquiring big apartments. I’m also in a possible move from CO to NH. 

Should I sell my turnkey safe rentals in CO in order to purchase 4-8 units in New England? Properties in the northeast tend to be older and require work, have lead paint, etc. But multifamily is where I want to be.

Dave 

[Ken Hobbick]

@Dave Michael  What I love about real estate are the many options you have.  I would agree with all, @Jeremy Gaal, @Ben Rhodin and @AJ Singh as solid advice.  Ultimately it would be what your end goal of getting into multi-family in the quickest way possible.  I agree Colorado Springs market will experience appreciation for the foreseeable future based on supply-demand and rate of building which can't keep up.   Both cash out refi and 1031 exchange are viable options,  I would add another option would be to 1031 one property and cash out refi the other.. you may not be able to get enough equity out this way but give it a little more time.   

As AJ mentioned they are very different management asset classes.  I would focus on finding and doing due diligence on multi-family property knowing you have both options available to you from Colorado Springs properties which could be implemented in short amount of time when needed and allow you enough time to get everything in place for 1031 or cash out refi.  The market is slowing a bit, but I see that as a good sign as its unsustainable at the pace it was early 2021 and it may take you a whole month to sell both properties instead of a weekend..  But will remain a strong sellers market 

Worst case scenario is you have appreciating, cash flowing properties in a strong market until you find a property and make your decision