Tons of equity, what would be your next step?

[Andrew Aladjadjian]

Hello BiggerPockets community!

I am a Los Angeles realtor/investor looking for your opinions on my current investment.

I own a condominium in Los Angeles which has built equity of about $200k (including selling costs). I want to start my next investment but have some options, and want to hear your thoughts and opinions on the next investment:

A) Refinance and cash out 100k to invest in another SFR or Multi-family buy and hold investment

B) Refi cash out 100K and find flip opportunity

C) Sell and 1031 exchange for a multi-family/SFR

D) Sell and 1031 for a fixer multi-family/SFR and repeat process.

E) Other ???

I have been listening to many BP podcasts and I like the Idea of buying run-down multifamily properties (1-4 unit), rehabbing (creating value) and selling for profit, and repeat. I would also need additional funds to make this happen and would be open to like-minded investors partnering up. 

So, how would you make your next move? 

Thanks

[Dave Foster]

@Andrew Aladjadjian, this oughta be good.  There will be no lack of opinions and every one of them could be the perfect option depending on the propetry/situation.

I'll muddy the waters right from the beginning and say it doesn't have to be an either or.  For instance - Do a refinance and buy something else (either flip or hold).  Why not?  It's fun, feeds the need for speed and the more flips you do the more you'll know whether you like it or not.

But that refi does not prevent you from also doing a 1031 exchange.  You'll just have less cash for the down payment on the next property.  So the refi gets you moving more quickly.  The 1031 builds using the deferred taxes.  That''s not a bad combination.

And another neat confluence of .the two is that you could use the 1031 to purchase the run down MF.  And use the refi/flip proceeds for the improvements on that property.  The 1031 can only be used for the purchase of a property so the rehab has to be complete either by the seller or by you in an expensive process called a reverse exchange.  If you've got dollars from a refi or flip sitting around you can actually by a fixer upper MF that is big enough to absorb your entire exchange and then fix it up using your outside the 1031 war chest.

So many choices - so little time :) . Have fun!!