First Time Poster- Cash Out Refi or Sell

[John Pearson]

Hello, I would like some advice on a property that my family owns.

It is two SFR's on one lot (detached) in LA County that was bought in the early 80's and is now owned free and clear.

It has an NOI of ~30,000 and I think it would appraise between ~800k - 1M (it appraised for 700k in 2008 when my father died), but it's really hard to find comps like this because of the multiple properties on 1 lot.

So with the market in Socal getting really hot again, I thought now would be a good time to either sell the property (into a 1031 exchange) or do a cash out refi and use the proceeds of either option as the down payment on a commercial property (which would obviously have a higher cap rate).  

The math and analysis I have done suggests selling it would be the better option, but anyone with a contradictory opinion would also be greatly appreciated.

[Rick H.]

Originally posted by @John Pearson:

Hello, I would like some advice on a property that my family owns.

It is two SFR's on one lot (detached) in LA County that was bought in the early 80's and is now owned free and clear.

It has an NOI of ~30,000 and I think it would appraise between ~800k - 1M (it appraised for 700k in 2008 when my father died), but it's really hard to find comps like this because of the multiple properties on 1 lot.

So with the market in Socal getting really hot again, I thought now would be a good time to either sell the property (into a 1031 exchange) or do a cash out refi and use the proceeds of either option as the down payment on a commercial property (which would obviously have a higher cap rate).  

The math and analysis I have done suggests selling it would be the better option, but anyone with a contradictory opinion would also be greatly appreciated.

Welcome to BP!

What you have is a duplex. It's hardly rare as two on a lot (single parcel) is fairly common in certain areas, especially LA county.

LA county is big AND diverse, since you don't even hint at the community or zip code or if this is a big house with a granny flat, pretty hard to guide you. 

Not following all your logic, as I've had (and currently do have) duplex rental with better (I.(ie higher) cap rate than most commercial /industrial properties offer today.

Want to elaborate in your info and append your original post?