1031 Exchange to do or not to do?

[Ron Mayorga]

I'm readying a house to do a 1031 exchange in Cedar Park TX. Problem is, I'm seeing a lot of listings with price drops all over the area. I wanted buy two houses with the planned $200k plus equity from the sale but I'm getting cold feet. 

What's are you guys take on this?

Background.

I was planning to expand my portfolio because the rental had at some point appreciated +- $250k in 4 years, plus the cash flow wasn’t that great. I waited until the lease was up but now, I’m caught up in this upheaval. I’m thinking about pulling out of selling and rent it again. I think I can get an extra $250-$300 on top of the old lease. My cash flow would then be around $400-$450.

The issue is that I don’t think I can get near to what my planning figure was. And, most likely the house would hit the market in July with another 1% interest hike.  In addition to that I'd be getting into a 7.25% +- investor mortgage rates that would reduce my cash flow to about $100 more than if I kept the house and just rent it again.

I feel I’ll be chasing a falling market.

Your input is greatly appreciated.

[Bill B.]

That’s a good time for you to do an exchange. If the market is falling and you’re selling a property that costs X, to buy 2 properties that cost x. That means those 2 properties will fall twice as much as your property. You’ll end up with less out of pocket. Then when it turns around you’ll be gaining twice as much. Win win.