All Forum Posts by: Dalton Thornsberry

 I appreciate this perspective for sure. This is where my mind keeps going. Time for the 1031 and upgrade to something with more doors is the logical situation. Even if I sacrifice a bit of cash flow in the long run a duplex, triplex, fourplex will likely cash flow better as rents increase depending on my entry price. 

 It just feels like I'm sitting on capital that can be deployed in a much more profitable manner. I realize my feeling might not match reality with current rates and everything else, and I realize there is a bit more risk but the bottom line at the very least is I could be using that equity to control more $$$ value in Real Estate. Albeit maybe in a market with less appreciation potential or cash flow which seems like the main drawback that I'm running into. 

Thanks! Currently working with a friend of mine who's an agent OOS in a target market to discuss actual rental comps, etc. 

I purchased a SFR (condo) in 2017 for around $130,000. I currently still owe around $111,000 on this property. Rents are $1475 per month and it cash flows about $250 per month after all management expenses, HOA, maintenance, etc.

My return on equity looks pretty bad (roughly 3.7% per my calculation). Current value on the high end would put this SFR at around $280,000. Worst case I sell for closer to $250,000. There are plenty of opportunities out there it looks like to deploy the roughly $120,000 capital (worst case) that I would see from selling in an OOS market. At the very least I could roll this into a duplex or triplex in the same market (Bakersfield, CA) and probably cash flow quite a bit more than I currently am. However, appreciation would likely not be as high on said duplex or triplex.

This feels like a no-brainer even with sky high rates. It feels like I should take that equity and put it into a Multi-Family property as I am only 30 years old and have plenty of time to continue to acquire and build my portfolio. At the very least that capital would allow me to control $400,000+ in Real Estate value v. the current $280,000 or so. If I took said cash from the sell and put it into a $200,000 property out of state I feel I could even cash flow WAY more than the current $250 monthly. 

What are the drawbacks? What am I missing? Need some help navigating this idea. Cash out re-fi would eat all cash flow and I'm not sure it would give me enough capital to tackle a quality property with current rates (I'm locked in at 4.25%).  

Thanks!

Dalton

 This is perhaps the best way to put it. I sort of came to this conclusion after a LOT of thought. This property is really high appreciation and imo has a LONG way to go over the next 10 years+. Since I'm in this for the long haul no reason to rush out of the property. 

@Sanjeev Advani I don't think I'm going to sell, I have other ways to snag some capital I'm just having to get a bit more creative. Also, I need to chat with you further in the multi-family space. I get your property updates and emails all the time and recently I've seen some solid deals but wasn't in the position to reach out just yet. I'll keep you in the loop if something that works for my BP and I's criteria pops up. 

@Carlos Ptriawan W-2 job has me in the San Diego area for the foreseeable future. It allows me to invest freely and compound wealth a bit faster. If I ever had back to Bakersfield I'd probably keep this rented and find a new spot to purchase and live in, anyway as RE is cheap up there, relatively speaking hahah. 

@Nick Robinson nah, I've been renting the place for some odd 4 years or so. 1031 would really be my only option at this point. I think I'll just raise rents. 

@Leo R. this is my major hang-up! That's why the Cash Out Refi doesn't really make sense right now. I'm locked in at 4.125%. The properties would be expensive to borrow on but they'd still produce a significant amount more cash flow than I'm currently seeing. The answer might just be raising rents, keeping the cash flow rolling and sit tight until February/March 2023 when I'll have a little influx of capital without pulling anything out. 

 I appreciate the recommendation on looking OOS. I've considered it for sure but never pulled the trigger. I do have family who is in real estate in markets near Little Rock, AK...etc. Overall, I think buying in the markets I know and understand really well is the first step for me and OOS could be a good opportunity for further on down the road.