Selling California townhome, plan to do a 1031 exchange

[Jennifer Roberts]

Investment Info:

Townhouse buy & hold investment.

Purchase price: $350,000
Cash invested: $100,000
Sale price: $665,000

Originally purchased as an air bnb, at that time it was more vrbo. Nightly rentals started to become a pain to manage so we went long-term rent. We started that before it became known as a popular 4 season destination. We probably could have held it, but with large HOA fees and a few other issues, along with it never being profitable, we decided to let it go. Last year, this time, it finally increased to the price we originally bought it at. Who knew vacation destinations were the last to rebound in a downturn? At least that's what we experienced. That's 17 years. With future uncertainty, we decided to put our money elsewhere. We hope to take the tax benefit of a 1031 exchange. Wish us luck!

What made you interested in investing in this type of deal?

We loved the location and knew we would travel there.

How did you find this deal and how did you negotiate it?

We just read rich dad poor dad and made an offer below market value. That was 2004. The good ol' days!

How did you finance this deal?

HELOC then 15 year.

What was the outcome?

Took 17 years for the market to rebound. Since it did it so fast (last year was finally at purchase price) This year was significantly more. The accelerated price increase was worrisome so we decided to sell 265K over the original purchase price. I forgot to mention we experienced the 2008 downturn with this townhouse. So it dropped significantly and took this long to rebound.

Lessons learned? Challenges?

I would definitely research the market. Wish I knew then what I know now.