Need advice on next move

[Jason Hawkins]

Hey all, I currently have a primary and rental. Not sure what to do for my next move. Contemplating selling the rental to get some cash for a new primary and renting out our current primary.  Wife and I really want to settle down with our 4 year old but I also want to continue acquiring rentals.

If I were to sell the rental and pay off what I'd owe on the HELOC I'd have $240k to put some down on a new primary then HELOC off of that and try to go more multi family route most likely CO springs or out of state.

Any advice is helpful.

Rental

Worth 650k

Owe 250k

Mortgage $1500

Rents for $3200

Have a HELOC on the rental with $105k available. Owe $100k-was used for down payment on current primary.

Primary

Worth $650

Owe $580

Mortgage $3400

[Jordan Malara]

@Jason Hawkins As with all things real estate, any advice I would give would be based on what your goals are. Without knowing that I will simply provide some of my thoughts/questions for your consideration. Before selling your rental property I would first ask what your current interest rate is on that property and also how that property is or isn't contributing to your goals? Debt is far more expensive than it used to be and one of the greatest parts of real estate is maintaining long-term fixed rate debt, so I would think carefully before trading a 4% for an 8%. You're also making $1700/month (not including expenses) on that property which would be hard to find right now in any high appreciation market like CO with its high prices and high interest rates. But if your goal is cash flow and not appreciation then maybe selling and buying in a market that is opposite of CO is what makes the most sense. Again, it just comes back to your goals. 

I personally don't love the idea of trading an asset (your rental) for a new primary (a liability), but I'm married as well and can understand that sometimes you may not have much of a choice. But your rental is making money and renting your current primary would likely not net you as much cash flow, so what if you just sell your primary and take the money from that to buy your next primary. If you lived in it for 2 of the last 5 years, then you don't have to pay taxes on the sale.

If after all this consideration you find you do want to sell your rental, I would highly recommend doing so through a 1031 Exchange so that you can defer the taxes on the sale.

That's just my two cents, hope that helps. If you every need any help looking at deals in Colorado Springs, let me know. I'd be happy to help you out or just point you in the right direction!