Keep it or Sell it?

[Jeff S.]

Pretty much know what will come of this question but just want to discuss anyway. Am meeting with a broker Monday that is an apartment investor and know where he will go with his analysis.

The situation: own a SFR Zillow says is worth 247k. Rents are low at $1065 pm should be closer to $1295 or more.

While the relative cash flow to the current value is terrible, the prospects for appreciation are high. The prospects of rental increases (appreciation) going forward are outstanding.

Here is the thing. Across the street and 2 doors down a builder bought a small house for 190k and tore it down. They are building a 2450sf home which will be valued at $500,000+. The property my house sits on would accommodate a 2 unit attached housing configuration.

This house could easily be a 1031 exchange candidate. The broker considers an 8 cap apartment after fixing up to be outstanding in this area.

Considering the shaky kind of financing available for apartments and the possibility of caps shrinking with increased rates, and the locked in upside of the property I own now, does a trade make sense for total return?