Rent back out, or 1031 exchange? Here or Florida?

Question

I've done a few 1031 exchanges. I'm considering doing 2 more. Two of my rentals are becoming vacant in 1 and 2 months. They are my lowest performing properties appreciation wise, pretty good rent increases though. I'm considering selling them and repurchasing here in the greater Seattle area (not IN the city though) or out of state such as Tampa.

They are NOT currently located in Seattle, just outside in the burbs. Here I get better MUCH appreciation. In Florida I get more landlord friendly laws and I want to relocate there anyways. That said, I just cash out refinanced 4 of my rentals and am sitting on cash. I wanted to buy more but have not decided whether here or in Florida, and whether I want to move to Florida. Previously I had decided that I would keep properties here due to appreciation. Adding a property manager layer is expensive but helps asset protection wise. Here is a far higher return appreciation and cash flow wise. Another reason I have not bought NEW properties yet is because I'm waiting to see what the market looks like when forbearance ends and foreclosures begin...

So what to do?

A) Keep renting the properties out at a higher rent? (Rent went up a lot recently).

B) Sell and buy a higher performing property with each via 1031?

C) Sell and buy in Florida where I MAY want to move? Going on a trip there again soon to evaluate further...

D) What else?

Of course I'm still sitting on cash I had before the cash out refinances, not to mention cash from the refinances...waiting for 1) a small dip and 2) making up my mind about here or Florida.

I'm leaning to here, as I can make more money here NOW and am not decided on Florida and unlikely to move within 2 years. Even once I move I may keep the properties here at least temporarily to make sure Florida was not a mistake. Even then, I may keep them here for the better appreciation.

Thoughts?

Jack B. · Answer

Thank you for making your first post such an insightful one. I realllly appreciate it. Looking forward to meeting up sometime if I end up moving there. I'll be there visiting very soon.

Jack B. · Answer

This is the rare, sensible advice you find on BP. I wrote it all on paper the other day and ran through it with my gf. Told her the exact same thing. Before I liquidate here or begin buying elsewhere, I need to MOVE first. Try that place out for size, maybe buy one rental, see how I like it THERE, THEN decide about selling here and buying more there. Phil Pustejovsky (sp) moved from TN to FL and did the same thing. He feels it's best to be near your properties where you can drive by them to see what's going on. I agree. I've read horror stories about PM's not doing jack and HO's driving by for a visit on a surprise trip and the place is trashed.

Chris Martin · Answer

@Jack B. In 2015, we cashed out what we had in CA and moved to Lutz. We found the house online and got it under contract without ever seeing it. 2800 sq ft custom home on a acre with granite upgrades, etc. surrounded by other 1 AC custom homes. No HOA, no deed restrictions. Rural feel, but 10 minutes from Home Depot. Beautiful area and no one telling us what to do. $350k. One thing you’ll notice if you move from Seattle, like we did from CA is how great you can live for so much less. We bought a mobile home park in 2016 and have done significant value ad. We are in the process of finishing up a $400k flip. The opportunities are still here, but not the easy pickings we found in 2016. I became a realtor to help with my investments. There are a couple of well attended REIA’s where you will find some good contacts. Just beware of finding a decent contractor. They are either a month out on schedules or the other 80% are at the beach and won’t show up when they say. That’s a real problem here. I’ve put together a pretty good team now, but it will take you some time to do that if you decide to invest here. Feel free to PM me if you want anything more specific.

Jack B. · Answer

Agreed. I'd be looking to move to the Tampa area. I'm making my second trip there in a year soon to look at houses. Property taxes in Tampa are higher, but the appreciation is good. Lutz, just north of Tampa has good prices and rents, lower taxes but less appreciation of course.Would love to connect and strategize. I'll message you on here to exchange info.

Alex Olson · Answer

@Jack B. I would keep what you have for now, find a reasonable rental property to buy in FL. See if you like the rental market in Florida, then sell all of your property in Seattle, move to FL and buy rental property in FL. Assuming you like everything about FL. Hope that helps.

Tracy Streich · Answer

Markets are on fire and prices are up. It always is best to sell under these conditions. Plus you can restart depreciation and take a big bonus depreciation first year. The question is do you have the resources to find a good deal to reinvest the proceeds. You don't want to get stuck buying at the top of the market

Sherief Elbassuoni · Answer

@Jack B., I agree with you, the appreciation here in some areas in the Greater Seattle area is in the double digits. We still have good deals in here in the Seattle area, but we need to be a little creative. I also saw some AirBNB properties or rent by room are generating cash flow more than a small multi-family.Where exactly in Florida do you think to move to? In general, Greater Seattle will appreciate more, but again, it all depends on the submarkets.Please let me know if you have questions or if you want to chat more and we can have a call or coffee.Best of luck!

Daniel Alhadeff · Answer

Jack, Sounds like you already took the equity out and paid yourself back as part of the cash out refi's. Since that cash is tax free, and your interest rates are probably next to nothing, I would buy more rentals in Florida with the cashout funds, and continue to rent the local properties for long term cash flows and future appreciation. This gets you the best of both worlds!Let me know if you want to discuss property management if you do indeed move to Florida. Happy to help!Thanks,DanielA6urban.com