Refinance, 1030 or Pay Caitak gains

[Fred Langley]

I'm new to BP, so if this is not posted in the right forum I apologize.

I currently have an investment condo in downtown Denver, my Principle Balance is $161k, and the value is roughly $300k. 

-P & I $969.87

-HOA $358

* with Internet/Power my cost is $1408

* it's been rented consistently for 3 years w/ 2 different renters @ $ 1750 per month

* Cashflow $341

**I BELIEVE DENVER MARKET IS OVER VALUED; Gut tells me to get out...properties in my building are selling in hrs/days

I want to invest in more properties (looking for cash flow for early retirement/Detroit, Huntsville, Cleveland, Indianapolis, etc) and am wondering your opinion on the best strategy:

-refinance and pull out some equity, but keep payment the same?

-1031 exchange

-sell and pay capital gains

-other advice

Any help would be appreciated,

Fred

[Bill S.]

@Fred Langley so in your shoes I would 1031 into something where I can still self manage in Laramie. I completely disagree with the idea that we are going to see a steep drop-off in values in Denver. Right now the numbers don't support that concept at all. We have growing job market, growing population and very limited supply in that price point. Like Matt M suggests, the supply end could increase if the construction defects law is changed but at this point there is no housing being constructed for sale that is below the media or average home price. That data says there is still lots room for price growth on the entry level price point (keep in mind that our prices are still laughable compared to some of the coastal cities). Where you are going to see some pressure, is in the rental market. You will likely see increase vacancy and perhaps even a dip in market rent. IMO you could easily see your net rent cut in half.

I am not a fan of your rust belt cash flow play. Would you rather own property in declining areas in 20 years or in an area that is growing and thriving? For me it's no brainer but to each their own and obviously there are folks making it work with that strategy as well.