A Successful Milwaukee Property Rehab - BRRRR vs Sell

[Doolan Wesley]

Hey everyone, I just wanted to poll the audience here quick. 

I purchased a home in the Bay View neighborhood of Milwaukee, WI, one block away from Humboldt Park about a year and a half ago. The purchase was with the intention to BRRRR the property. The single family market in Bay View is so hot at the moment though that the valuation after the appraisal outpaces the potential cash flow. I think rent on the completely remodeled 3 bedroom/2 bath property with a two care garage would be around $2500-2800, but the cash on cash return to keep equity in the deal isn't great.

Option 1: Refinance and keep 25% equity in the deal (currently owned in cash). Then look to 1031 the property in the future into something that offers a better cash on cash return to avoid long term capital gain taxes.

Option 2: List it as for sale by owner and considering the prospects of selling. Take the tax hit, but avoid 4-6% realtor fees.

Any input would be welcome.

[Ty Ash]

Hi @Doolan Wesley!

I agree with @Charles Clark that your choices is going to depend on what you'd like to accomplish/your goals. You're sitting in a good position where both of your options you presented are possible.

I like option 1 a little more in general because of the area, appreciation potential, and it sounds like you'll be cash flowing. Unless you have another deal/opportunity lined up to use the proceeds for, this seems like a strong option. If you're hoping to be a little more passive, maybe consider using someone who does arbitrage since it is in a good area for STR.

Best of luck!