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Updated almost 4 years ago on . Most recent reply
Sell or Not multi-family
Hello. We are thinking about selling 4 family house in NJ (owned since 2009 and have about 500k equity in it at the current market price). My husband and I both have full-time jobs and been managing this property on the side somewhat passively (without putting in too much work/raising rents). It has a cash flow of about $800 per month - probably could go up more if it's managed more actively. But we are now wondering if It's better to sell the property as the inventory seems low. And use the proceed to invest in other markets. (thinking about Raleigh, NC). We do want to get into real estate investing more aggressively and think maybe this could be a good time to make the move so we can get properties with more value. But this house has been a good investment for us - easy to rent due to its close proximity to the city, almost zero vacancy - so we are having a hard time making a decision to sell. Would appreciate any advice! Thank you.
Most Popular Reply
@David Lee Congrats on owning a 4 plex!
Right now is a good opportunity to sell, but if it is not something you've lived in as a primary home, then you'll want to take into account the potential capital gains taxes by selling. Although it will be lower rate (probably 15% of the gain) since you've held on to the investment long-term, but it will still take a bite into the gains. Another option is to do a 1031 exchange into a new property, but there are strict rules on how the proceeds are transferred and dates to identify and close on the property. A less discussed option is to invest in an opportunity zone.
How much more effort will it take to manage the property efficiently and maximize the value? If you want to be passive, then ensure you build in costs for property management.
Before determining if you should sell or keep, make sure you know your why in investing and what goals you need to accomplish your why. Are you investing for cash flow or appreciation? Do you want the cash flow now or can it wait? What is your appetite for rehab?
Good luck!