Your thoughts on my numbers

[John S.]

I'd like to hear other opinions on this...I'm debating if I should cash in on my 3 flat in downtown Wheaton, IL.   Any thoughts out there? 

In March 2018 I completed a three year battle with the City of Wheaton (this use to be a 4-flat with code violations from prior owners).  Now that I've cleared up the violations, I'm wondering if I should cash in and pay off the renovation debt and buy another place.

My architect is recommending me to convert it back to a single family home which will increase the property value significantly (due to comps... there are no rental comps in the area, just sfh comps).  I'm thinking of doing this conversion myself with hard money.  So here are the options I'm wanting your input on...

1. Keep as a 3 flat rental and pay off the debt slow over 10 years, but have a good / steady rental income after that.

2. Sell as is and pay off the debt now, but no good / steady rental income after that (could buy another).

3. Obtain hard money of $250k, convert back to a single family luxury home, and sell for a potential 71% Cash-on-Cash Return.

4. Something else I have not thought of??

Here are my numbers that I was going to add to my Zillow Listing (the potential investor would pay me the $450k purchase price), hopefully this makes sense to you...

Best Case Cash On Cash Return: Convert Back To Single Family Home

$450 purchase price + 250k conversation for a $700k Total Investment

Sell $1.2 million (architect's estimate)

500k Net Annual Income

500k/700k = 71% Cash On Cash Return

Current Case Cash On Cash Return: Continue As A 3 Flat Rental

$450 Purchase Price

25% down is $112,500

Annual Net Income is $12k

12k/112.5k= 10.69% Cash On Cash Return

(could be 13 to 14 % if you raise rents to market value)

Here is the actual property:  400 S. Hale St. Wheaton, IL 60187

Thanks in advance for your input!

John