Partner, Exchange, Hold, or Renovate?

2 Replies

Hello BP Friends,

I want to reach out and get input from some that have more experience and a different perspective. My current situation is that I live overseas in Japan (active duty military) and have two rental properties in Jacksonville, FL. I want to expand my portfolio and am looking for the best next step forward. Here are the details

Property #1

Worth 280K, Owe 207K

Rented for about 3 years now, cash flow only ~$100/mo

Property #2

Worth 180K, Owe 124K

Rented for just over 1 year, cash flow ~$200/mo

I see a lot of equity with not a lot of cash flow, appreciation has been pretty good in my market but that won't last forever. My options that i'm considering are 

1) 1031 Exchange these SFH into a MFH (2-4 units)

2) Hold the properties as they cash flow and rent well / low vacancy

3) Partner with someone on one of their deals since I am busy and live overseas

4) Renovate Property #2 to add ~150sq ft new construction and add a master bed/bath (It is a 3bd/1ba so make it a 3bed/2ba and is currently 1117 sq ft so making it 1267sq ft) there is a house on the same street thats a 3/2, 1250 sq ft that sold for $260k recently.

5) Other options I am not thinking about currently

Please weigh in, don't forget I live overseas so some things that should be easy are a little more difficult with time zone changes and building relationsships. What would you do?

By my math you're only making a 3% return on your equity. I ran into this same situation with a property. My initial CoC return was good but my return on equity was under 4%. I chose to exchange it and get more than a 10% return on my equity.

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