Does he pull out or let it grow?

18 Replies

He planted the seed 2 years ago...

Hi everyone. 

So I picked up a 4-plex a couple of years ago, and thanks to a highway getting approved for development in that town the value has jumped roughly 50% in what was an otherwise stagnant market.

The property is cash flowing a bit, but nothing special considering some unexpected repairs last year.

So my question is: would you think about holding on to it and see where the market settles?

Can I refi and take some of the new equity out?

Sell and level up to something bigger?

Any guidance is greatly appreciated, thank you!

Updated almost 3 years ago

*this property is in Oklahoma

@Jamison Haussman

OK, so here's what I know about the market in Honolulu...a big fat nothing.

I suspect that's sadly among the more insightful responses you're likely to get in this thread.

what town?  i would lean towards selling as the market may plateau or drop again after the highway is in.  

yeah I am assuming this is part of the turnpike expansion.  if you are right on an exit you might hold value if it becomes a commercial area. 

@Rhett Tullis sorry missed your question. It's in Choctaw, on main street. It's not right on the exit, but when I saw wal-mart make move in I figured they did the research so I'd move in as well. I think I'll move to sell, thanks for the advice! Can try and level up instead of sitting on something small

I was going to suggest doing a cash out refinance, but that's bad idea if you're not cash flowing now. 

So that leaves you with sell (and pay capital gains) or 1031 (and save capital gains).  I've only done a 1031 once, but don't regret it. It gives you more purchasing power. Plus, there's a decent chance the buyer of your property would allow a delayed closing in order for you to better "identify" your next purchase. 

Good luck! 

@Jamison Haussman , First to top - first to pop!  The hype of something like a highway to a small town is always large and then reality settles in about what the reality is.  I've seen this in small towns for decades.  Your property was only marginally performing before it jumped in value.  Now it's worth 50% more because a road is coming to town?  Fundamentals don't really change.  Take the windfall and move one.  Confuscious would be an idiot to hang on to that one (sorry @Dennis M. I had to jump on your proverb :)

Forget about percentages. A 50% jump in value from something worth $50k is only $25,000. What's the aggregate jump in value? If it was worth $500k, and now it's worth $750k, and you say things are stagnant, that's a nice profit to reap. 

Absolutely, thanks for the insight @JD Martin @Dave Foster @Dustin Beam ! It's flowing, but just. 

There's room to grow that with new management (way too overpriced with current manager), but am still under contract with them. 

At at that point it would still be just a couple hundred dollars per month. 

If I can work out a 1031 and get more units that are more affordable to manage (out of state investor) then that would be ideal.