100k in appreciation. What should I do?

[Joel Neidig]

QUESTION:

I purchased my first home a little over 4 years ago in Henderson, NV. I moved out a little over a year later and it turned into a rental. As of today it has appreciated roughly 100k yet it only cashflows $250 per month. Refinancing it and pulling some cash out will thin out the cashflow even more.

Should I continue to hold it, sell it, 1031 it?

Please share ideas and opinions.

[Joe Villeneuve]

Originally posted by @Gabe Barlow:

Originally posted by @Joe Villeneuve:

Your equity is dead, and your cash flow is making your equity a prisoner.

Sell, sell and sell.  Free your equity.  Turn your current 1 to 1 valuation into a 5 to 1 valuation by selling and reinvesting.

I have similar circumstances Joe...have about 170K in equity in one rental and it cash flows about 500 per month. For now Im not totally set on a market to 1031...could be nerves or emotion because this would be my first 1031 and it was my first rental. Would you ever do a HELOC on a rental and buy additional property one at a time and pay the HELOC off?

No. I would never use a HELOC to buy property with. Mu HELOC is my cash reserve for CAPEX.

Here's are 3  math problems for you:

1 -Let's say you have $170k in equity, and you sold the property and collected your $170k in a lump sum (minus closing costs, etc...).  How many properties can you buy, at 20% down, with that money?

2 -  Based on Q #1, how much equity would you have if you sold your original property and bought new properties with the profits 9see Q #1)?

3 - If you had $500/month ($6k/yr) in cash flow from the original property in Q #1, how long would it take you to accumulate enough CF to equal the $170k in equity (cash if the property was sold...see Q's #1 and 2)?