I have recently bought and rehabbed a duplex that turned out to be better than I expected. I have new tenants that are signing leases and numbers are looking great. But I have another project that I have been presented with and I am really intrigued with the numbers and potential of the other project. Needless to say, if numbers are great in both situations would you sell the first project to help fund the new project
keep the current rehab and use rents to help fund the project? Knowing that either way I will have to get a some sort of loan for the difference.
If i take on this next project, I will definitely have to post it because it will be a very large rehab.
Never sell unless you have to. Ok...so maybe never is a fairly strong word....but don't sell. How many forum posts do you see about people flipping duplexes? Exactly. Those are cash flow machines. Collect them....don't sell them.
Are you saying that you could take down both but you'd have to get a loan to do it? Or do you have a choice between one or the other.
I'm not sure what the problem is if the only issue with taking down the second deal is that you'd need a loan. Leverage is one of the key ways that real estate improves returns on an investment.
I'd rather have control of a 150k asset and take out a loan where I have less cash flow than not have control because it won't cash flow enough with a loan.
At some point, it just depends on whether the numbers of the second deal work with the loan.
Now if you're saying you can only have one or the other, then I think you'd want to take the one thats going to make the most money.
Wouldn't make sense to keep deal #1 with 50k in equity capture if deal #2 would net you 100k in equity capture.....
You did one project and it looks like it turning out great for you. I would keep it and build up my cash reserves. You can always find another deal right in the middle of just doing or finishing off another one. But you want to hold on the good ones and let that investment mature a bit. You know what they say, " one bird in hand is worth two in the bush".
Of course the decision will be your's to make but if you wait the time you will find another deal you are well prepared for. That's my thinking anyway.
Thanks for the advice. The reason for the discussion is I am thinking about about selling 3 units and upgrading to 8. And if I do this then, I would get the equity out of my current projects to help with the upgrade to the 8 unit project. But i wanted to keep in somewhat general to help stir my mind to think this through more.