Need advice on deal.

[Dave Antonelli]

I have 4 properties in Bismarck,ND. With the recent oil boom up here, rents have increased dramatically. Oil prices have dropped, but production and trucking havent slowed down and probably wont for awhile.

I bought a side by side duplex in 2010 for $149k. It generated $1375 a month at the time. In 2014 I signed new leases and now it will earn $1750 a month. I was recently placed the property online for sale more so as a feeler rather then a serious effort. I listed it for $211900. I have good interest in the property and have been dragging my feet on showings and what not, so lets just say I could sell it for $211900. The property has about $7k in needed updates waiting for me in the spring.

So the reason I am dragging my feet, is I am not sure what I would invest the $$ in. It makes no sense to simply sell and rebuy in my own market, because I wouldnt be taking advantage of in the hot market here and I might as well keep the property. I found a cabin in South Dakota in a tourist/ski area. The cabin is 1/4 mile from the base of the ski hill. Cabin costs $240k but has been listed for nearly a year now. So for comparison sake, lets just say I could get it for $212k and just wash on the deal.

The cabin:

Grossed 32k

After all expenses it netted $17k last year.

The duplex:

Will gross $21k this year.

After expenses will net around $17k (I do all repairs and management, so I just deducted $1000 water bill and $3000 for misc repairs that may arrise)

Soooooo theres the dilemma. Nets will be very similar. Advantage to the cabin because I need to update the duplex to the tune of about $7000 in the spring, or could sell as is now. Duplex is more the sure thing, if economy tanks then vacation home may sink.

Any input?

[Peter MacKercher]

Its a tuff call. It seems to me you like the idea of owning a cabin instead of a duplex. That being said have you done inspections on the cabin? You know what you have with the duplex but you don't know what you're getting with the cabin. This year you plan on making more than 17k that you did last year 4,500 more. But you have 7k of work to do. 

So i guess the question is which property will return the most over the next 5 years? Also would you use the cabin when its not rented out?

That being said if you do sell the duplex i would 1031 exchange it into the cabin or what ever else you buy.