Moving up in investment strategy

[Kenny Tran]

Hi all,

Just wanted to get some advice from the veteran investors out there. I'm 29 years old and bought my first investment property two years ago for $130K. I purchased it well below market value (which was around $190K at the time), and I was able to BRRRR it—so I currently have zero money invested! Today, it's worth about $200K. I cash flow around $60 a month from it, and I've got about $70K in equity. The low cash flow is mainly due to the 8% interest rate, but hey—I'm not complaining.

Now, I’m looking to “move up” and use a 1031 exchange to roll that equity into a duplex with stronger cash flow. Based on some rough numbers in my area, one side of the duplex would cover all expenses, and the other side would be pure cash flow—around $1,600/month. So I’d be jumping from $60 to $1,600 in monthly cash flow.

My strategy is to move my equity into something turnkey and with better cash flow. My question to all the veterans is: what do you think of this approach? The only downside I can think of is that, since I’d be buying at close to retail value, I probably won’t see much appreciation. Also, the property barely appreciated in 2 years due to the current economy so should I wait a little longer to see it appreciate more or cash in that 70k equity and move on. I understand its a personal preference on what to do and I am in no financial strain to need to sell right away.

I'd also love to hear from some veteran investors who started out like I did and worked their way up from SFH to apartments or commercial buildings. Hearing your stories would really motivate me!

[Dylan Brown]

Hey there — love the hustle and how you’re thinking a few moves ahead.

Your strategy makes a lot of sense from a business standpoint. If you're really able to go from $60/month to ~$1,600/month in cash flow, that's a huge leap. Using rough math and assuming ~$500/year of principal paydown, your return on equity (ROE) would jump from about 9.6% (i.e., ((500+60)∗12)/70,000((500 + 60) * 12) / 70,000) to around 36% with the new property — a massive improvement. So from a purely performance perspective, it's hard to argue against it.

That said, the 1031 exchange might not be the best fit in your situation. With only ~$70K of equity, the costs of doing a proper exchange could eat into too much of your gain:

• ~$1–2K for a qualified intermediary

• ~$1K in tax prep, CPA consultation, and misc costs

• Plus the time, compliance burden, and tight replacement timelines

Another thing to consider is that doing a 1031 means you inherit the old depreciation schedule, which limits your ability to run a fresh cost segregation or bonus depreciation analysis on the new property. If you sell the current one in a taxable sale and reinvest into a new property, you may be able to fully offset the capital gain through accelerated depreciation on the new purchase. We sometimes call that a "lazy 1031 exchange" — it’s not a legal term, just a nickname for achieving similar results without the formal exchange rules.

At the end of the day, I’d recommend working with a CPA who can model both paths for you. It’s worth running the numbers before you go all-in on one direction.

You’re clearly on a great trajectory — I’ve worked with a number of investors who started the same way and scaled to mid-sized multifamily or commercial portfolios. Keep asking the right questions and making thoughtful moves like this and you’ll be there in no time.

Feel free to shoot me a message if you want to dive deeper into the tax side of this. Always happy to help.