Moving up in investment strategy

[Kenny Tran]

Hi all,

Just wanted to get some advice from the veteran investors out there. I'm 29 years old and bought my first investment property two years ago for $130K. I purchased it well below market value (which was around $190K at the time), and I was able to BRRRR it—so I currently have zero money invested! Today, it's worth about $200K. I cash flow around $60 a month from it, and I've got about $70K in equity. The low cash flow is mainly due to the 8% interest rate, but hey—I'm not complaining.

Now, I’m looking to “move up” and use a 1031 exchange to roll that equity into a duplex with stronger cash flow. Based on some rough numbers in my area, one side of the duplex would cover all expenses, and the other side would be pure cash flow—around $1,600/month. So I’d be jumping from $60 to $1,600 in monthly cash flow.

My strategy is to move my equity into something turnkey and with better cash flow. My question to all the veterans is: what do you think of this approach? The only downside I can think of is that, since I’d be buying at close to retail value, I probably won’t see much appreciation. Also, the property barely appreciated in 2 years due to the current economy so should I wait a little longer to see it appreciate more or cash in that 70k equity and move on. I understand its a personal preference on what to do and I am in no financial strain to need to sell right away.

I'd also love to hear from some veteran investors who started out like I did and worked their way up from SFH to apartments or commercial buildings. Hearing your stories would really motivate me!