sell or hold duplex?

[Matt Williams]

Hi, new to BP.  So....I have a duplex in a crappy neighborhood. for months, a company out of the metroplex has been offering to buy it. diamond holdings and aquistions. So we agreed to $170k. It is only worth $120k, so I thought why not?
However, now I am having second thoughts. It is all paid off, and I am making $1400/mo cash flow. I depend on that cash flow as my income every month.
Cash flow is my primary goal right now. I had a converstion with a mentor a while back, and He thought I should sell one of my rentals (I have two, both fully paid off) and then pursue passive investing. Which is why I decided to talk to Diamond about selling.
I have signed the contract with diamond.
So after long term cap gains tax eats about $20k. I am left with $150. $20k for the sophisticated investor class, and then only two passive deals at $50k each . Then, I have to wait years on any income, right? I am not convinced this is a good path.
Your thoughts?

[Greg Scott]

Paid-in-full real estate almost always results in sub-optimal returns.

Do this math. Get a 50% LTV loan and buy another property just like the one you own. A 50% LTV on a $120K house at 7%, 30 year Am results in a $400/mo interest payment.

The cashflow on your existing duplex goes to $1,000 per month, but now you can buy another just like it so yoru cashflow goes to $2,000 per month.  This is obviously much better than $1,400 per month.

On top of that, you will now get 2x the depreciation write-off so your taxes should go down.

On top of that, you will now get 2x the appreciation when real estate price go up.

On top of that, your tenants are helping you pay down the loan, initially at about $100/mo for both properties, which gradually gets better and better.

On top of that, you now have more units so if one or two goes vacant, you have more renters covering the losses of the vacant units.

If you want to keep these properties, I would do a cash-out refi and go buy more rental real estate.