All Forum Posts by: Cole Hopkins

Hi All,

I have been investing in Charleston, SC for about 4 years now and recently continue to wonder if its in my best interest to do a 1031 exchange on my first duplex purchased in 2014. I would love to know your thoughts.

Property Specifics: The duplex was purchased in 2014 for around 250k in an up and coming area in DT Charleston. Since then, I have fixed it up a bit (put in about 35K to increase rents). About a year ago I did a cashout refinance to secure funds for other properties and the property reappraised for $480k. With that said, I now have more properties but with the new mortgage (after the refinance) I am making just enough on rents to pay the mortgage (no cash flow). 

My Thoughts:

With interest rates on the rise and the fact that I am basically breaking even on the property with no positive cashflow, I wonder if it in my best interest to sell and do a 1031 exchange into a larger multifamily that would generate positive cashflow before interest rates become to high for the numbers to make sense. 

Since the property was re-appraised at $480K over a year ago the area has continued to improve and seen further  increases in real estate prices. I anticipate that if I sold, I could probably get on the low side $500K and on the upside maybe $550K/$600K. Using the conservative low sale price of $500K this would net me about $170K to use as a down payment on something much larger in a more up and coming area. I could easily put in an additional 30k or so and purchase something in the range of $800K. I guess my concern is if I sell premature and the property values continue to increase and I miss out but there is no telling and I just can't see the prices increasing all that much in the near term but perhaps after the next dip which could be another 5-10 years (who knows?)

In addition to the potential increase in cashflow by doing a 1031 Exchange, it would give me peace of mind as this property is the only one in my portfolio that is exposed to a high risk of flooding during a natural disaster as it is located in a very low lying area.

I am happy to provide additional numbers/details if there is anything I am leaving out. I also understand that a lot of it will all depend on what I can find in terms of a property and what kind of numbers I will see in cashflow but my thoughts are that if I look hard enough I can do better than my current situation - getting no cashflow. Maybe I just answered my own question but this would be a big move for me and I just want to make sure I cross all my t's and dot all of my i's. 

I appreciate any and all feedback on your thoughts. 

Thanks in advanced, 

Cole

Hi @Ryan J. Shope, 

As Buddy mentioned, I follow the market here in Charleston and can definitely suggest some areas to keep an eye on for good investments. I would suggest browsing realtor.com, reaching out to local wholesalers and realtors to receive deals as soon as they come available and be ready to move on it fast if it makes sense. 

If you want to message me your info, I'm happy to connect anytime to discuss in more detail. 

Thanks,

Cole

I would like to join the next one as well.

@Russ Scheider City of North Charleston

@Justin Tahilramani - I am purchasing this to be used as a rental property - I will not be living there. I am checking in with the seller but I believe he purchased with cash.

Hi All,

I am looking for any advice, thoughts or someone to just tell me I need to move on. 

I placed an offer that was accepted on a good size plot of land that connects 2 different streets and has 3 separate units on it in Charleston, SC. About a month or so into the process (yesterday) I receive a call from the lender that the appraisal came back and due to the fact that the property is zoned R-1 and contains 3 units on it they cannot proceed. The lender believes the only way the seller will be able to sell his property is an all cash transaction. 

The real bummer is that I have already spent $1,000 on an appraisal and repair estimate and wish this came up sooner before investing any money into it. 

My questions are:

1) If it is zoned R-1, how are there 3 units on the property, year built listed is 1939, all with their own electric meter? (there is 1 water meter for the property) Is it possible it is zoned wrong?

2) Are there alternative lending options outside of a typical conventional residential mortgage loan that I should consider?

3) Is there anything I can do to make this purchase happen that I am not considering? 

I appreciate any feedback on this.

Thank you!