Portfolio Review - Equity Deployement

[Jordan Blanton]

Primary Residence – Market Value: 385k, Principle Owed: 216k - 3% interest rate

Rental Property #1 – Market Value: 165k, Principle Owed: $0 (Cash flows $1,050 per month)

Rental Property #2 - Market Value: 220k, Principle Owed: 108k (Cash flows $720 per month), 5.11% interest rate in year 4

Rental Property #3 – Market Value: 325k, Principle Owed: 242k (Cash flow $365), 5.875% interest rate in year 1

Rental Property #4 – Market Value 330k, Principle Owed: 258k (Cash flow $385), 5.875% interest rate in year 1

PORTFOLIO WORTH: 1.42M - MONTHLY CASH FLOW: 2520 

Asking for a portfolio review and more specifically how do I redeploy equity? Leaning towards doing a 1031 exchange on the paid off, lower valued property, as the other ones are newly aquired in better neighborhoods. Only negative about a 1031 is finding something that cash flows. But even if breaking even, assuming (and I do) that I have enough to cover payments, I'd be doing the 1031 to lock in 500k more control of real estate. Any thoughts or directions would be much appreciated! 

[Matthew Morrow]

Quote from @Jordan Blanton:

Quote from @Matthew Morrow:

Quote from @Jordan Blanton:

Honestly, you’re in a pretty solid position overall. Low interest primary, decent equity spread, and positive cash flow across the board puts you ahead of a lot of investors right now.

Personally, I'd be careful selling the paid off property just because it's smaller. Free-and-clear rentals are hard to replace today, especially if it's producing over $1k/month. That's strong. I'd probably first look at whether there's a way to leverage some equity instead of fully disposing of it. A HELOC or portfolio loan against multiple properties could potentially let you redeploy capital while still keeping the cash-flowing asset.

The 1031 logic makes sense if your goal is scale and consolidation into a larger multifamily or commercial asset. We’ve done a lot of creative finance and portfolio growth over the years, and one thing I’ve learned is cash flow matters way more than just “controlling more real estate.” Bigger isn’t always better if the deal becomes tight every month.

I’d probably ask yourself what the actual goal is over the next 5–10 years. More doors? More cash flow? Less management? Better appreciation markets? That answer usually tells you what move makes the most sense.

Overall though, nice work. You’ve built a strong base already.

 Thanks for the reply Matthew, greatly appreciated! 

I've thought about doing a cash-out refi, and would still be able to cash flow a healthy amount per month. And exactly what you said is concern: selling a cheap paid off house that costs me nothing per month and making me 1k, and trading up to a ballpark 3k a month mortgage (4k monthly swing on paper). A lot more debt to pay every month just to capture some extra appreciation. 

Regarding my goals, would just be to create wealth efficiently. Sometimes I think I am too anxious in that goal and need to just let relax and let things marinate.

 Anxious is good! But investors harness that and know when to dive in / punch out. Youre further along than you realize. Trust your gut- and when it doubt- hit the forums / ask a mentor or someone whos walked it before. Happy to help in the future.