I bought, sold and traded up several times since 2003. Ended up with a triplex that generates 11k per month.

It’s worth 2.4 million, the mortgage is 1.4.

Which of these options make the most sense or if you have other ideas please share.

1. 1. Trade up again (1031), use the million in equity towards a bigger multifamily property.
2. 2. Try to pay off the note as fast as possible and pocket the 11k?
3. 3. Go down the syndication route and have an equity stake.
4. 4. Buy a couple small multifamily turnkeys.
5. 5. Get into a conservative NNN lease.
6. 6. Wait to see where the market goes.

My goal is 20k monthly passive income.

First of all- great job. 

But if your goal is 20k monthly passive income- then option #2 doesn't work. My best guess is you need to decide between Option 1, and 4 if that is your goal.

Thanks Michael! Appreciate it 

@Nick Newman is the $11k NOI or gross?

I think #1 is the best route, @Nick Newman . You may have to look to other markets with lower prices and good cash flow, but with a reasonable CoC ROI of 12%, you'll be half way to your cash flow goal.

@Greg Dickerson - 11k is gross per month. After expenses I walk away with $2500.

Thanks @Jaysen Medhurst! Appreciate the feedback.

@Nick Newman If you are looking to become a passive investor, I recommend looking into a DST (Delaware Statutory Trust). You can diversify your $1 million of equity into 2-3 DSTs in multiple asset classes and geographic locations. For example, self storage in Arizona and multi family in Florida. Your monthly NOI of $2,500 is $30,000 annually. Most DSTs I see on the market start paying 5% on invested capital. The starting net cash flow on a DST would be around $50,000 and you don't have the hassle of actively managing the property anymore.

I would think with a million in equity available you could invest in a few multifamily.  Or maybe a property with some value add that you can cash out via equity later on.  That's the route I would go for unless you find a super good deal that it makes sense to 1031 exchange into.  

So you have a million to work with pre-tax, and your goal is $240,000 per year. As others have said, the DST could be a way to get you in to passive syndication investing. One option might be Capital Square 1031. They're based here in my market of Richmond, they specialize in this type of thing. I haven't done business with them, so I don't know the ins and outs of their business.

I haven't done a DST structure, TIC, or any of that in my syndication business. Really in order to be worth it from my perspective you'd have to be a fairly significant investor in the deals, from a dollars perspective. Otherwise the additional expense and steps to do a more complex structure wouldn't make sense.

@Nick Newman , congrats! It's great to have options right? Very cool. I would either trade up or go the syndication route. NNN aren't bad as well. From what I'm hearing you prefer to be more passive than active. That's why NNNs aren't a bad option or a syndication. Turnkey's more than likely you will be paying near retail value with no value to add. Through a syndication you can do much better. Making sure you choose the right operator is key to be successful in syndications if you're passive. Good luck.

@Nick Newman you don't necessarily need a DST to 1031 into a syndication. I've done a TIC and since you would be bringing significant equity, you shouldn't have a problem finding someone with a deal. I would recommend that you continue to trade up.

@Nick Newman , $2,500 ($30k yearly) profit on $1 million equity is only 3% ROE.  You'd do as well or better with a high yield CD or tax free muni-bonds.  Seriously!  Too much hassle and risk for such a meager payday.

If you want substantial higher cash flow, staying put isn't going to achieve that.  I would sell and diversify into markets that have a better cash yield, since your goal is cash flow.  Maybe Class C+/B- units, mobile park or self-storage.

Appreciate all the feedback from everyone!  A couple of other things I should mention...

I purchased this multifamily for 1 MM in 2012 put down 250k (loan was 750k). I added 300k in value and held the property in a NYC sub-market market for 7 years. 

The reason my outstanding debt is 1.4 MM.  

I recently pulled out 400k with a HELOC to gut renovate my primary residence (750K purchase) (new assessed value is 1.3MM).

I also recently refinanced and pulled out 250k of equity to make another move (multifamily, flip..).

My ultimate goal is to leave my corporate job and be an active investor.. I love the process of buying, renovating, renting or selling. 

From all the things I have been reading and listening to trading up to the bigger multifamily property is the best way to build wealth and income.

Originally posted by @Nick Newman :

Appreciate all the feedback from everyone!  A couple of other things I should mention...

I purchased this multifamily for 1 MM in 2012 put down 250k (loan was 750k). I added 300k in value and held the property in a NYC sub-market market for 7 years. 

The reason my outstanding debt is 1.4 MM.  

I recently pulled out 400k with a HELOC to gut renovate my primary residence (750K purchase) (new assessed value is 1.3MM).

I also recently refinanced and pulled out 250k of equity to make another move (multifamily, flip..).

My ultimate goal is to leave my corporate job and be an active investor.. I love the process of buying, renovating, renting or selling. 

From all the things I have been reading and listening to trading up to the bigger multifamily property is the best way to build wealth and income.

 Nick, you are right in saying MF is the way to go.

If you like the triplex and it seems like it's in a nice area, then my suggestion is to refinance - pull some cash out and invest that into a MF. 

Have you considered passive investing into a syndicated deal? 

Another option is TIC/ Joint venture with an experienced apartment investor.

@Erik W. I fully agree the 3% ROE is reason to look to improve the investment. However, the rest of the story needs to be considered when comparing to a CD. 

1. ~$24K/yr principal pay down and growing each year
2. ~$27K/yr depreciation (In NY, that probably equates to $12K cash flow)
3. Any appreciation/inflation that happens (who knows what that will be)
4. Any additional cash flow from rent inflation over time

Now for the real magic. He started with $250K equity, pulled out $650K and still has $1M in equity left! The $250K turned into $1.65M AND leaves him with ~10% CoC ROI and about 25% if you include

And that is why we all love real estate and why BiggerPockets is amazing. Even with a horrible 3% CoC ROE.

@Nick Newman nick, nick...ok you finally spill the beans in your last post! Let’s see, you buy for 1 mil, add 300k, and in 7 years presto it’s worth 2.4. Where does that happen? Answer: very few places! (Like NYC, SF, select coastal areas.)  Moral of story: maybe it’s best to continue investing in high value markets, where I assume you live near, can gauge the appreciation trends, can manage a value add, etc.

So I suggest option #7:  cash out refi, and keep doing what worked well for you before. There’s a cadre of us in the SF Bay Area and that’s how we succeeded. 

my2c