Sell California Condo or Sell and 1031 into OOS Multifamily?
Edit: The title should have been "Lease California Condo or Sell and 1031 into OOS Multifamily?"
I have a condominium I bought about 5 years ago for $60,000 that I can sell today and walk away with about $100,000 after selling expenses. It rents for $975 per month ($11,700 per year) and after expenses I clear about $6,500 of NOI. It's owned free and clear which means, based on my total cash invested, it has a COC return of 10.8%.
However, when calculating my Return on Equity, I'm only getting about 6.5%. My question is, if you were in my situation, would you continue renting this property out or would you sell the condo and look into investing out-of-state in a market where you could take that $100,000 and buy 5 houses or a small apartment building? I think I could get closer to a return of 10 to 12 percent on my $100,000 rather than a 10.8% return on $60,000.
Also, another option is that I rent the condo out and get a line a credit on it. I have a bank that is willing to loan $60,000 at 5% interest against this property, so I could pull some equity out and deploy it elsewhere for a higher return.
I am interested in Cincinnati as a market but I am hesitant to jump into an out-of-state property because of the difficulty in managing a property that's not within a few hours drive of where I am. Also, my condo is currently vacant and I want to either rent or sell it ASAP which means I don't have a lot of time to fly out to other markets and make connections with property managers, etc. Additionally, I work full time and wouldn't be able to get time off until around Thanksgiving.
I'm interested to hear your thoughts and suggestions on my situation.