1031 exchanging to a more prime property?

1 Reply | Oakland, California

Newbie to this forum and hoping to get some insight from all of you experts!

I have a rental property in Dublin/Pleasanton area and am wondering if I should sell and 1031 exchange it to a property in a more prime area closer to jobs - eg Oakland/Berkeley/Redwood city/San Jose/Milpitas. I roughly have 400K in equity. Some numbers below

original price - 350K

remodel cost - 150K

so cost basis around 500K (not including depreciation)

mortgage remaining - 350K (24 years remaining on 30yr @3.75%)

current rent - $3200 /month and cash flow around $1000, I'm not including vacancy or repairs as we have never had it vacant and with our remodel everything is brand new 

I'm guessing home value should be around 750K, so I would have 400K in equity.

Its cashflowing right now which is great but I can't help but wonder if in the long term a property in prime Bay Area would make more sense than a bedroom community. However, selling would also mean giving up my current prop tax which is based on the original price.

So I'm going back and forth, any opinions?

Sounds like an easy property for you to manage, as you know it well and it’s very close to you. I’d keep it and do either: cash out refi, 2nd loan or (my fave) take out a heloc. Then use those funds to buy your next property. Smart leverage = you keep a good property with a low tax base + you buy another property. Have your cake and eat it too!