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Updated about 1 year ago on . Most recent reply

Analysis Question: Keep or sell/1031 an existing rental
We bought a rental for cash about 8 years ago and it's cash flowed very well. I'm trying to evaluate if we should keep the property or sell it/1031 exchange into another investment, but I'm struggling to figure out how to do the analysis.
Initial Purchase: $65,000 (Cash)
Estimated market value: $250-270k - We'd clear $200-250k if we sold.
Current Rental Income (after expenses): ~$1,417
My gut tells me that we can leverage the proceeds into higher cash flowing investments, but I don't know how to do the math. Is there a spreadsheet/template you would recommend?
Most Popular Reply

You’re making 7-8.5% on your net equity, nots not bad in todays market.
what are you going to do with the money? You’re going to pay at least 10-20% in willing costs, vacancies, make ready, concessions, buying costs, new vacancies etc.
So you could get a 20% loan ($50k?) for “free”. (Money you would lose selling anyway.). Is that enough to buy another $250k property with 20% down in the market you already know?
If that sounds too risky get a 50% loan, use it for a downpayment on the second property also with a 50% loan.
If you hate the property, or it’s falling apart, or in a bad neighborhood you want to get out of. Sell. It’s not the best financial decision but it will make you happier. Otherwise borrow on it and buy another. Good luck.