Updated over 4 years ago on . Most recent reply
Trading cash flow for appreciation
Hello,
I'd like to know your thoughts on 1031 exchanging a cash flowing property (purchased 3 years ago and over 1% rule) for a better property in a nicer area. The nicer area will certainly not cash flow as well with current prices, but should have greater long term appreciation. There is also the possibility of using it as a STR to generate some extra cash flow. I know it depends on your individual strategy and goals - and we are not in need of cash flow currently, but it feels so wrong to me to look at properties with a worse return. I feel sick when I run the numbers and see a decrease in cash flow and start to doubt why I am even doing it in the first place! Any advice would be much appreciated.
Most Popular Reply
#5 All Forums Contributor
- Plymouth, MI
When you refi to do a cash out, the cash flow goes down since the mortgage payment goes up. When you refi, you don't get access to all of your equity...just part of it, and you are usually leaving 25-30% of it behind. This happens each time you do it. You are also limited in how many times you can refi...not so with flipping.
I don't invest in STR's because I like to have control over my investments...but that's just me.