We own a SFR in Oakland, CA. It rents for $4k/month - 2 bed / 1.5 bath. Approximate value (according to Zillow) $1.1M.
30 miles east of us in Pittsburg, CA there is a duplex currently for sale for $430k with rents of $3.9k.
Now on to my question. If we can get nearly identical rents with 1/3 of the property value should we sell our SFR and buy the duplex?
@Bryan M. Welcome to BP. On the face of it-yes, sell. The only consideration would be the fact that you are in a market that appreciates pretty consistently, and that can be a game changer. However it is the SFR that appreciates way more than a MF in your market. So, what is you goal? You could sell and buy 2 duplexes. Or take out a line of credit and buy the duplex and keep the SFR. Options are always important to have.
Hard to tell from the limited description. I would never do a deal where I 'lost' value in anything in life (career, property, etc).
If you're just selling the SFR for let's say $1m and buying the 430k outright, you now theoretically have a ~600k surplus in equity right? What are you going to do with that 600k?
If you can turn the sale of the SFR into 2-3 new rentals then yeah there's value there. If you can leverage your equity in the SFR to finance the MF then there's value there. What are your property investing goals?
@Bryan M. - i'm in the same vein as the two above....given the limited info you've provided, I would suggest getting a HELOC on the SF to purchase the duplex. Good luck!
What will you have to pay in tax's on the sale?
So a duplex is theory is always better insulation in a down market for abaviuous reasons . There are so many othehr factors like mantience, appreciation and size etc .