Investor · Spokane, WA · Member since 2015 · 238 posts · 133 votes
Greetings good people,
I'm looking for some feedback on the decision to sell or a hold a duplex I've had for 6 years. In short, it cash flows very well ($1000/month, partly because I put 40% down), is in a desirable and growing town in an excellent neighborhood with increasing rents and I have never had problems getting tenants. The market has become very inflated.
Price paid for property: $265k
Potential selling price: $600k
I hate to mess with a good thing in considering selling, but I am wondering what the most advantageous strategy would be. An implication of selling is that to reinvest I would need to buy out of the area, likely out of state.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
5y
Sell it faster than you can re-read this post. Faster if you can.
That 40% you put down, to get higher CF, is an illusion. All you did was pay for that "higher cash flow" upfront. Realize that your cost is completely restricted to what comes out of your pocket...like your DP. The more that comes out of your pocket, the more YOU paid for the property...and, the longer it takes you to get a profit. Profit comes after you recover your cost.
Her are your numbers:
1 - Your cost was 40% DP, or $106k 2 - Your recovery comes from your CF. $12,000/year. 3 - Recovery period =~ 9 years. That's way too long. On the other hand, you have $335k in cash (hidden in equity) just waiting (and dying) for you to put it into play. Go out an use it as a 20% DP, and buy a property, or properties) worth $1.675M (yes you read that correctly). Imagine what the accumulated CF could be from that.
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
5y
@Carlos Gonzalez
Well you are in luck my friend. This is the golden age of information. In 30 minutes or so and YouTube/google you’ll be a pro.
Seriously, it's a big subject that I'm not smart enough to defend, but the biggest reason I decided against it was I went from one LLC that onwed several things into several LLCs that owned one thing each. Also, percentage of debt was an issue and debt structure. Either-way, get YouTubing and get smart about it. The one I did gave me a very large write off on a building I owned 6 months wiping out some pretty big gains. I think 1031's has its place. If you are truly going like for like and your selling in a LLC that just has one thing and that LLC will own the new thing it's probably the best vehicle, but if there are more layers to the transaction or partnerships etc it gets messy fast where cost seg is clean, yet has its own downsides. I went more in depth than I wanted. Lol. Check out the internet and learn from people much smarter than I on the subject.