1031 Out of My Property to a 4-Plex?

[Kelvin He]

Hi

I purchased an investment property in 2018 in Austin, TX.  

Purchase price $225K

Cash flow -$200/mo

Current sale price $410K

I knew I was going to be break-even / negative cash flow when I purchased my first home, I was ok with it since I house-hacked and was betting on appreciation, which it did. I gained almost $200k in equity within 5 years, and only put $10k down.

Now I think it's time to put that equity to use.

I'm thinking of purchasing a 4-plex in McAllen, TX. It is a city that I believe will grow, but I believe few people out of state know about it yet.

4 Plex:

Purchase price $525K

Cash flow $500/mo

Is this a no-brainer to go ahead and do it? Or is the upside in Austin worth it to hold? I don't see this property growing exponentially anymore, and the fact that I'm currently in negative cash flow, and finally want to put this equity to use makes a lot of sense to me.

All thoughts and comments are welcome. I love spitting ideas back and forth. Thanks for reading and looking forward to hearing from you guys!

[Dave Foster]

@Kelvin He, If you've been living in that house as a house hack.  It is possible that you can sell and take all of the profit tax-free using the primary residence exclusion.  Your title mentioned 1031.  But I doubt if you'll need it.  Tax-free is better than tax-deferred :)