Hello Team, I have a 4Bed/2.5Bath SFR in Central Texas with a tenant leased til OCT 2022 and a property manager agreement til 2023. It is not cash flowing but I am breaking even because the property taxes are killing me (I guess I'm building equity/appreciation). There's 275k mortgage left (VA loan) and the comps are selling around 400k-420k and Redfin/Zillow estimate it as 390k. I have two questions: Can I sell the property via 1031 Exchange with a leased tenant and property manger? Or should I cash out refinance into a conventional loan and use the equity/VA Entitlement to purchase another property?
My gut is telling me to sell since I don’t see myself investing into Texas anytime soon. I’m currently stationed near Ft Lauderdale but I’m originally from Arizona and would like to purchase a multi family there. Thoughts? I’m a rookie as you can tell. Thanks a bunch!
Rental Property Investor · Normal, IL · Member since 2016 · 170 posts · 85 votes
4y
A breakeven deal in an appreciating market can be a great wealth generator will market rents make it cashflow when you sign a new lease? Rent should go up some at each renewal. Are you allowing for cap-X expenses and repairs? Is it truly break even or have you not had any other expenses yet to put you in the negative?
@John Leake The house is 3 years old now so nothing crazy as of yet. I’d like to raise rent slightly because I know for a fact property taxes in Texas are going up since the house appreciated 90-100k in the last year.
Rental Property Investor · Normal, IL · Member since 2016 · 170 posts · 85 votes
4y
@David Navidad I would see what you can do with the money you would get in either option and compare cash on cash returns. The money you would pull out could be significant down payment on a mid size multi unit apartment building. Ask your property manager if they are managing any apartment buildings that the owner might sell to you and see if you can upgrade and get some cash flow.