Next investment Advice

[Daniel Suarez]

Hello BiggerPockets Community,

I'm at a crossroads with a townhome investment in Baltimore County and seeking your insights. Originally purchased for cash flow, this property exceeded my expectations by appreciating roughly 70% over five years, jumping from $130k to $220k. With a locked-in low mortgage rate of 3.2%, and about $100k in equity after expenses, I'm contemplating my next move. The catch? It's in a challenging area where Section 8 is virtually my only tenant base—not a slum by any means, and the house itself is in great condition.

Here are the options I'm considering:

A) Keep and Re-rent to Section 8: By investing in some upgrades (paint, cabinetry, toilets), I can increase the rent to $2k (from $1800), projecting a cash flow of approximately $1300/month.

B) 1031 Exchange into a Short-Term Rental (STR) in Shenandoah: This would involve using a portion of the proceeds to make the property Airbnb-ready. I'm optimistic about potential appreciation in this area.

C) 1031 Exchange into a Rising Market: I'm eyeing markets like Columbus, where the growth prospects seem promising. This option would require assembling a local team as I'm considering forgoing a property manager.

D) Invest in a Better Maryland Area: The goal would be to find a property with higher appreciation potential, though I'm aware that the cash flow might not match what I'm currently achieving.

Given the unique circumstances of my current investment—significant appreciation, a specific tenant base, and a low mortgage rate—I'm weighing these options carefully. I'd greatly appreciate any insights, experiences, or advice you could share, especially from those who have navigated similar decisions.

Thank you for your time and wisdom!

[Marc Rice]

Quote from @Daniel Suarez:

Hello BiggerPockets Community,

I'm at a crossroads with a townhome investment in Baltimore County and seeking your insights. Originally purchased for cash flow, this property exceeded my expectations by appreciating roughly 70% over five years, jumping from $130k to $220k. With a locked-in low mortgage rate of 3.2%, and about $100k in equity after expenses, I'm contemplating my next move. The catch? It's in a challenging area where Section 8 is virtually my only tenant base—not a slum by any means, and the house itself is in great condition.

Here are the options I'm considering:

A) Keep and Re-rent to Section 8: By investing in some upgrades (paint, cabinetry, toilets), I can increase the rent to $2k (from $1800), projecting a cash flow of approximately $1300/month.

B) 1031 Exchange into a Short-Term Rental (STR) in Shenandoah: This would involve using a portion of the proceeds to make the property Airbnb-ready. I'm optimistic about potential appreciation in this area.

C) 1031 Exchange into a Rising Market: I'm eyeing markets like Columbus, where the growth prospects seem promising. This option would require assembling a local team as I'm considering forgoing a property manager.

D) Invest in a Better Maryland Area: The goal would be to find a property with higher appreciation potential, though I'm aware that the cash flow might not match what I'm currently achieving.

Given the unique circumstances of my current investment—significant appreciation, a specific tenant base, and a low mortgage rate—I'm weighing these options carefully. I'd greatly appreciate any insights, experiences, or advice you could share, especially from those who have navigated similar decisions.

Thank you for your time and wisdom!

 Columbus is definitely a rising market where if you can keep buying here over the long term then you should really benefit from the growth and trajectory. It is hard to cash flow here in decent ares but if you can wait out rent increases/interest rate drops then you should be able to cash flow handsomely in those good areas.