I want to start a discussion on whether this is a good time to take equity out from rentals which have appreciated a lot and use that to acquire more rentals. Alternatively whether it’s a good time to sell old rental for newer constructions and avoid maintenance costs/active work involved in managing the rentals.
Or whether it’s a bad time considering that it’s very hard to acquire new properties – and 1031 exchange gives you very limited time to acquire them. Plus due to covid restrictions it might be harder to get new tenants in for the new properties.
I have 1 primary residence (paid off), and 4 rentals that were bought with 25% down. Buys were spread over 2013-2019. They are all in Austin area. this is my side hustle (day job – engineer). me and my business partner manage and maintain all of them ourselves (so 2 people part time).
I am in the process of doing a 1031 exchange for 1 rental which was constructed in the city in 1979 – and was able to buy 2 new SFH (2019 construction) with 50% down on each with the amount – albeit 30 min drive from the city (in new areas which seem to be exploding). I had to put 50% down as i needed to use up all the 1031 funds – and i did not have the time to search and buy more new properties in this crazy market within the time limit (sent out offers on 10-12 at-least, and was able to grab 2). Primary motivation here was to get rid of the older multi family, and roll to new SFH’s.
For the remaining properties – due to recent appreciation – it seems that i now have 60-70% equity tied up in each. I am sure other investors and landlords are in similar situation.
Are you taking equity out and rolling it in new rentals ? or holding tight for a more reasonable time ?