I just bought my first house hacking SFH in Boonton, NJ. I plan on staying here until I finish my masters and then 1031 exchange into quadplex. The reason why I don't want to hold this property the house was built from the 1890s. I don't know why, but I'm so worried about it ever since I moved in and my neighbor mentioned he had a termite problem. It made me wonder if I'll get this issue or if I have it and I don't even know because the seller never disclosed that to me. I have no experience flipping and if I even open that can of worms by breaking down the drywall later and try to BRRRR it, I know it'll break my bank account because I wont know what I'm doing. I rather have an investor buy it who knows what they're doing do the flip and resell it.

I purchased the property for 315k, (Appraised 325k) which 30k down and 10k for closing costs (all in 40k). Its a 3bd/2ba house where I'm getting $1800/month without utilities included. I am paying all utilities. If I leave after a year I can rent the whole thing $2300 with utilities as the tenant responsibilities.

Room 1: 950 rent

Room 2: 850 rent

Now since I'm covering utilities it ends up being close to $500/month. And my PITI is 2150, so my expenses end up being around 2650. I realized now that it was not a good deal since my cash on cash return isn't very high. I rather get the equity into another deal where I will cashflow better, but I'm stuck into the deal for a year until I can either sell, cash out refi, or 1031 exchange.

Option 1: If I sell, I have to pay capital gains tax where I feel i would've lost a decent amount of money. I'm not even sure how capital gains tax works. Its based on the profits (I know about the 2year capital gains free thing) only, but can I count what I paid my lawyer, closing costs, realtor fees when I sell to offset my total "real" profits and then pay capital gains on the real profits? or is it purely on sell price - bought price without my 10k loss in closing costs on both ends?

Option 2: cash out refinance. I know I can pull equity out of the deal but since I did FHA, this is not really an option for me. Since I'm paying $2200 now with PITI in the current deal, if I pull equity out then I'll pay more. $700-$800 of that is just property taxes(NJ). I rather do option 1 or 3. Also I don't know too much about this either so If I paid 30k/315k toward the house. Lets round that to 35k actually and say I'm 10% equity right now. If the house appraised after I bought it for 325k (which it did). Am I still 10% equity of new market price or old? So if I cash out refinance and leave 5% into the deal. Do I get 5% of the bought value from the bank(315k) or of the appraised (325k)? Like what would be the final amount the bank would give me cash, and remaining loan balance? Does my interest rate change because I got 2.235% which is amazing. (APR is like 3.3% I think). Is this the same thing as HELOC?

Option 3: 1031 exchange scares me honestly. You have i think like 45 or 90 days to 1031 exchange, and If I don't then what? No one talks about the consequences so I have no idea. What happens if I don't meet the deadline for 1031 exchange. Also does the buyer HAVE TO BE the bank? and do I have to do a weird buying contract to mention my funding is through 1031 exchange. I don't understand the process of this honestly if someone could shed some light.

I know this is a bit lengthy, but I'm a newbie and only way I'm going to learn is through asking questions from people have been through it. I really value you're experiences and expertise. If you can shed light on few of these things, I'd really really appreciate it!

Need a Strategy to go from my first deal (bad deal).

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