All Forum Posts by: Jon Edmondson

Hi All,

I bought a SFR in the KCMO area back in January 2021. It has strong cash-flow but has also appreciated quite well. I am struggling to understand how to pencil out at what point the correct decision is to "trade-up" from this successful property through 1031-exchange so that I am making the best use of this investment capital. With the low 30yr fixed interest rate I have locked in, and the solid cash flow from this stabilized property - I am finding it difficult to make the decision to 1031 into a bigger property given current mortgage rates in the 7's-8's. But at some point, I am just not making best use of the ~100k equity sitting in this property - So, at what point does RoE drop far enough that the only logical financial decision is to 1031-exchange and trade-up?

Thanks in advance for your advice/opinions.

Purchase: $136,000 - Jan 2021

Current Loan Balance: $126,585 

30-yr fixed Mortgage (3.875%): $979 PITI

LTR Monthly Rent: $1595/mo 

Cash-Flow: $1595 (rent) - $979 (PITI) - $200/mo (CapEx/PM/Repair/Vacancy/Contingency) = $335/mo

This leaves me with an approximate RoI: 9% and RoE: 4%

Estimated Current Market Price (Dec 2023): $230-240,000

Estimated Post-Sale Equity: $ 90,000 - 100,000

Key assumptions:

- The area the current property is in is not suitable for transition to MTR/STR strategy to boost current cash-flow.

- I do not live in the KCMO area and do not have the option to house hack/owner occupy any new purchase.

- With current investment property HELOC rates in the 10-15% range, I do not see this as a viable option currently to access my equity position.

- My 15 year goal (currently in year 3) is to replace my current income with stable passive real estate cash-flow and retire.