Advice on Next Steps (2018): 1031 out of CA to IN/OH - SF or APT

6 Replies

This is my first post.  I am in my early 50's and look to retire from education in 8 years.  My goal is to acquire $5000 in passive income from rentals in 8 to 10 years.  I have 3 rentals in Southern CA purchased in 2011 which produce positive cash flow but more importantly they have double in value.  Rental #1:  Purchased 90K, Current Value 200K.  Rental #2:  Purchased 155K, Current Value 315K.  Rental #3:  Purchased 190K, Current Value 355K.  

After listening to Clayton Morris and Bigger Pockets Podcasts over the last 6 months, I believe in order to reach my goal I will need to 1031 exchange to the Midwest, namely Northwest Indiana, Indianapolis, or Ohio, where the markets will allow greater passive income and I have family who live there.

I am open to turnkey property or to create a team to rehab a property for long term rental.  It can be single family or Multi apt complex.

I would love to hear from you about my next steps.

I think this could be a great strategy to relocate your assets to the more stable midwest. 1031 exchange should get you plenty of opportunities in the rust belt. Its just a matter of finding a quality team that you can trust to move forward.

@Denise M. Tschida , What's your cashflow look like right now? It looks like you've got around $450k to $500k in equity already (unless you cash out refinanced), so you need a roughly 12% net cashflow return in order to reach your $5k goal today. But, if your goal is to do it in 8-10 years, you probably have time to take it a little slower, and I'm wondering if you might hit that goal anyways just by sitting on your three rentals. I'm connecting a lot of dots here... but you may have a bunch of different options (perhaps more conservative) for you to easily hit your 10 year goal. Got some more details to share?

@Denise M. Tschida

rents are rising slowly in southern ca anyway. Midwest and Midsouth look attractive but property capex is not cheap due to weather factors.  Big cap rates are only in iffy neighborhoods which are being billed as turnkey to out of state investors. Take a trip to those areas and check the neighborhoods yourself before doing a 1031.

My two cents

I have a brand new duplex in northwest Indiana for sale in the marketplace. It is in Lowell which is a great community and a great neighborhood that I would live in myself. I could have it rented out completely and sell as a turn key.  I haven't filled it with renters yet as I am exploring my options on just getting a refi and keeping or just selling it. I know you can find higher returns in north Lake county but that is a much rougher area. Feel free to pm me for more info.  

Hi Denise lets discuss.  I dont think at the stage of retirement in your life you should consider learning about investing out of state.  I have a friend in retirement who did that and lost his money in a neighborhood in Ohio.  I have a few suggestions.  Feel free to message me.

If those CA properties are performing well, you may want to just refinance them and use the cash to purchase additional properties.

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