Decision: Sell/1031 reinvest OR add ADU to up cash flow

[Lorraine Mas]

Hi, I'm new to BPs and this is my first post. I have dabbled in renting rooms or properties I own over the years but am trying to step this up and get better at analyzing what I have and my next steps.  Semi-retired and plan on increasing my RE portfolio. Trying to navigate BP for useful tools/calculators while I improve my own accounting. 

My current top concern is a rental I own in CA (25 years). Recently, value has gone through the roof so equity is very high. They have also changed the laws to allow ADUs and I have enough square footage/resources to add on. I have all my records, but not a good spreadsheet that gives my ROI, COCR, etc. I'm trying to step this up to make this analysis easier for me. I also have a deadline looming (lease renewal is up soon and I have to make a decision to renew, OR change the lease to allow the ADU add-on or sale of the property).

Any direction to useful calculators, articles to read or how to set-up a spreadsheet to give the appropriate analysis would be greatly appreciated. Maybe there is something on the website that can be used for properties that are already owned. I'm trying to use the Rental Property Calculator applied to the property owned, but not sure if I'm doing that right.  I have my yearly income and expenses and basic yearly P&L, but I have never formally put together something that spans years. It's time!

I was leaning towards the 1031 exchange route, but with the market so hot, finding appropriate properties could be hard. And the taxes may kill the profits. Property tax on this property is still reasonable and they don't reassess the whole property when the ADU is added (my best understanding anyway!) Selling without an exchange doesn't make sense - too much equity.

Anyway, I have a million questions on how best to make use of this property, but, first I need to figure out how to properly run the numbers so I can make good comparisons. If there is a calculator on here that allows me to run numbers for updating an existing property and comparing options, I'd like to hear about it. Or a spreadsheet that can be used for accounting, I'd like to hear about that too. I may have my accounting updated before I get help, but I thought I'd put this out there and start talking with the community.

Thank You,

Lorraine