Seeking some Sage Advice.....
Hi folks, here's my situation:
I have a 4-plex in CA's Inland Empire. Good Solid Rents. Gavin Newsom's idiocy draws me to want to sell up via a 1031 and move my money to a red state. Problem: I'd probably get $1.2M - $1.4M if I sold on the MLS, it would be tough to get near the same rents in other states with that money.
So.... Do I put up and shut up (and slowly go insane) or sell up and make considerably less than I do now?
My sanity says "sell," my pocket book says "keep."
Your thoughts? I'm sure many of you have been down this worn road.....
Most Popular Reply
@Mike Stone - you're wrestling with something most landlords face eventually: the tradeoff between peace of mind and cash flow. Neither choice is wrong, but here's how to think about it systematically.
First, separate the emotional decision (sanity) from the financial one, even though they overlap. A 4-plex with solid rents in the Inland Empire is probably still cash-flowing, which means your money is working for you. If you sell, you get a lump sum but then have to redeploy that capital. Given current rates, finding 5-7% plus returns elsewhere is getting harder.
That said, cash flow alone doesn't tell the whole story. What's your actual annual return on the property right now (cash on cash), and what could you get if you took those proceeds elsewhere? If the Inland Empire is returning 4% and you could reliably get 6% in a different market with fewer regulatory headaches, the math might favor selling.
The "going slowly insane" cost is real though. If you're spending 10+ hours a month dealing with compliance or specific tenant issues that don't exist elsewhere, that's a real cost. Multiply your hourly rate by those hours - is the cash flow worth it?
I'd also look at: are the regulations making it harder to rent, or just harder to manage? If tenant demand is strong despite the regs, you might be able to pass some friction to a property manager and get your sanity back without selling.
What's the property actually returning cash-on-cash right now, and what's driving the frustration most - day-to-day operations, specific tenant issues, or just the regulatory environment?