All Forum Posts by: Nick Liu

Hello,

I am a newbie to biggerpockets and I have a real estate investment strategy dilemma.

I currently own two single family homes in Tigard OR since 1997. There were new construct at the time and has been rented out ever since. We were fortunate to have the same renters since the beginning with stable rent. Both properties are located in the same neighborhood and is probably worth around 400-450k each. With renovation, I could probably sell for 500k each. Both are also paid off resulting in a net operating income of 29k annually combined.

I would like to continue to grow my portfolio and I have several ideas in mind:

Option 1: I could sell both properties if I put some money in to update both homes as they are both stuck in the 1990s. Since we had stable tenants, we really did not have the opportunity to renovate the properties. However selling them would trigger larger capital gains tax and lose the benefits of passive income.

Option 2 is to do 1031 exchange both into Multi-family homes/apartment. I have been following the PDX market for several months now and it seems the cap rate in PDX is on the low side (4-5%). I was looking at several properties in the range of 800k-1million and I just don’t see a great return on these compared to my existing rentals. Anything more than 1 million would require a mortgage which can greatly reduce cash flow.

Option 3 is to take equity out of my current two rentals and buy new properties. I am not sure on how to go about doing that and whether I can take something like a HELOC to buy additional properties.

Any idea on how to move forward is greatly appreciated!

Nick