Sell One to Build Two

[Nick Wehrley]

I have a 4/2 1550sqft rental (1945 build) that I’m considering selling to potentially build two 2/1 ~700-800sqft houses. My first rationale is the smaller homes will attract the type of tenet I’d prefer compared to the larger home I currently own which would be larger families. Turnover, in theory, should be cheaper as well.

The current rental cash flows ~$400/mo. If I were to sell and build the two smaller houses, I could likely fund them enough from my gains on the current rental (and a little out of pocket) so they also cashflow ~$300-400/mo each.

So, at the end of the day It’d be a wash or a little loss, cashflow wise, on one house and I’d gain ~$300-400/mo on the other house. Of course, I’d be using the equity I’ve gained in the current house so I wouldn’t have that anymore, but my current focus is cashflow, anyway.

I’m looking to discuss any pros/cons, faults, suggestions to this plan.