Need Help - Hold or sell to invest in multifamily

[Nerlande Joseph]

 corrected post - "I currently own the condo not owned as previously stated" - Condo is in Miami, FL

I own a condo 3/2 and 1/2, 2 stories; bought pre-construction and closed in 09/20 (first deal). Condo is currently rented until September 2022 with $400 gross cash flow (no maintenance so far since condo is new). I am thinking about selling and use the money to buy a duplex or 3-4 multifamily units. Here are the specs:

25% down portfolio loan 5-year arm (bad rookie idea) at 4.625% (next increase 10/2025). I can't do a HELOC on the investment and I don't want to refinance to get cash out as the interest rate on the new loan would be too high. The condo appreciated about $100K at the low end of the estimate as of today's estimation. I have about $160-190K equity which will net me a good amount of cash after fees and closing cost.

That is my only source to continue investing - I don't want to touch my house which has a 2.75% interest rate, although I have some equity there too. I really want to tap into a small multifamily as I now want to dip both feet into rental investing while still keeping my full-time job, off-course.

Thank you so much for the help

[Percy N.]

@Nerlande Joseph, as I understand it, you have a few options (and more):

- Sell the condo, pay the taxes, invest the rest

- Sell the condo and do a 1031 exchange into another investment property

- Sell the condo and put the gains into a QOZ investment

- Move into the investment property for 2 yrs and make it your Primary residence and the gains (up to $250K/$500k if filing jointly) will be tax free.

So a lot depends on the tax outcome you desire (consult your tax professional).

From the sale, you can look for a SFR or smaller MultiFamily or I would even look into being part of a Multifamily syndication, where you are passive, but collect decent cash flow and have upside.

Doing a 1031 exchange into a small property is possible with $150-$200K but doubtful anyone will allow a TIC into a larger deal for that small an amount.

Hope that helps.