Does Return on Equity Matter

[Steve L.]

I own mostly SFH in Southern California. Market value has changed on many of them since I bought them and my return on equity is pretty dismal. We are starting to debate if we should sell some of them to generate cash flow and capture some of the equity.

Some of the items I debate when thinking about this:
1. 8% disposition costs
2. My time value of finding a deal, rehabbing it and making it perform (sweat equity) is already completed on the existing portfolio.
3. 1031 exchange, taxes and financing to my purchases can be tricky (makes 1031 exchange hard).
4. My costs of financing are extremely expensive and 'unrecoverable' if I sell early.
5. I believe short-term we will see further appreciation in the type of inventory I own (might get some flack on this one, but inventory is at an all-time low here).

Do you factor in return on equity?
Any feedback or advice?

I think wait it out and 1031 exchange into a more expensive asset class (apartments, light commercial) might be the easy answer.