Advise needed on selling Boston condo and investing on triplex

[Matthew Fermino]

I’m looking for some advice on whether I should sell my condo I rent in Boston and use the equity to get into my first duplex or triplex out of the area.

When I first purchased my condo about 8 years ago I didn’t really have a strategy but I thought buying it, living in it and then eventually renting it for a little cash flow would be the plan. In the last six months or so I’ve really gotten into BiggerPockets and I’m looking to be much more aggressive with my real estate investments. Below are some details and areas of uncertainly

Right now I cash flow about $100 a month which I thought was more until I really did the BiggerPockets calculator and realized my true costs. But I have accrued tremendous equity and could probably clear on a sale about 175k to 200K after fees BUT before capital gains. The challenge is the tax implications I would have make me wonder if I should sell and leverage the equity or hold this and start looking for other ways to build up my portfolio with my “true plan” in place. I’d like to start with some duplex rentals to buy rent and hold for 4-5yrs to build equity then sell and keep up leveling my net worth.

I really appreciate any advice and would love to connect with some like-minded folks in and around Boston/Providence

[Lien Vuong]

You're experiencing a very common problem in the high appreciation of Boston. I've help several clients figure out these metrics to know what's the best choice for their investing goals.  

I think these proper steps would help guide you in the right direction: 

1. Meet with a agent to figure out asset value and selling costs - this determines value and outlines your net sheet of how much you'll net after the sale

2A: Review with your CPA for tax costs if you just sold and pocketed the money

2B: Speak to a Qualified Intermediary (@Dave Foster) and review those cost and other options with an 1031 exchange into other properties/TICs/DST etc.

3. Review what purchase options are with an agent in different markets - Boston/Providence/NH whereever to see what your money can get for you and what property inventory looks like with the $ you could exchange 

4. Review what is a realistic lifestyle you'd like to have - Buy 2F in high appreciation with great tenants but high purchase price VS 6F in a B- area with high cash flow

5. Decide if the sale is worth this or you can just pull equity out and purchase another with higher loan risks 

I like to begin with the end in mind so before you make a final decision I would assess all those options and just figure out what's your risk tolerance and expectations of returns on your investment. 

Good luck :)