Sell SFH to buy Multifamily

[Lidia Bowers]

Hello dear BP people! The current situation: Own an almost 100 year old rental SFH in a very desirable neighborhood in Fort Worth, TX Lease agreement is for two years ending on 11/30/18. Would love to keep and rent that house but running negative ($200/month) cash flow on that property. However this is the house that appreciates the most out of the 4 rentals we own. Would love to buy a multifamily (4-12 unit) in a year or so with 25% down using 2017-18 savings and keep the house in question. Nevertheless, I'm afraid the market would be less favorable for sellers next year. Also interest rates might go up as well. Question is: should we try to sell this house this summer and try buy a small multifamily with a 1031 exchange or rent/keep it and wait to buy the multifamily next year with savings? Side note: I’m a realtor so I would be the one dealing with these transactions. I have no experience in multifamily. I have managed our rentals since 2013 when we got our first one. I also have a full time W2 job and 4 niños to deal with. I appreciate your input. Lidia

[Thomas S.]

Now is a good time to get out of SFH rentals before the markets do turn. SFH are becoming much higher risk as opposed to multi units that are valued on rental income. The SFH appreciation speculators should be getting very nervous. In your situation, having negative cash flow, which is generally the case with faith investors you need to get out before you can't.

I would be looking to sell now or very soon and get into multi units.