Hi Landlords-

Do you like SF home or small apartment buildings for cash flow and appreciation - and why? Thinking of taking $200,000 in profit from an eight-unit and doing a 1031 to buy four single-family homes, cash, maybe a duplex thrown in there.

Some background: Our market is Pittsburgh. It's a seller's market, for sure. Our offers are above what they were six months ago. We're not even marketing it but still getting offers; it's across from public transportation and a few miles from the airport. The units are mostly efficiencies, with rent at low end of market due to size. But it's not Section 8 and the renters are great.

I'm leaning toward selling - yeah, we could hold and get more money later (like maybe if Amazon lands here) but that also means the price to buy will go up.

Our ultimate goal is to keep acquiring more rentals - SF or multis, for the appreciation and cash flow.

We are in a good market right now. Prices up, interest low.

You never know what for sure may happen in the future that could change this.

That said, if the units are in good shape, there is little to gain by doing improvements or rehab, so all that's left is general appreciation and the cash flow.

I would stay put, even though I prefer SFRs over units, for various reasons.

The number 1 reason: At this market it's easy to sell and hard to buy. Once you sell what you have, you become a buyer, and buyers are facing slim picking right now. Thinking of potential money makers fixer uppers? They are sold before they hit the market.

Rent is good? Good tenants? They pay on time? Good cash flow? You don't HAVE to sell? - stay put.

I liked the four units I had. There were good with cash flow. Anything larger seems like it would be difficult to repair. Figure the top two units have access from attic and heat only has to go up two floors. Downstairs is a breeze to access for repairs. Three units continue to cash flow if one goes empty. These were 640 and 720 sq ft and the larger had a little second bedroom about the size of a walk in closet and I changed them into closets.

I don't like SFH as it's too time consuming to rehab and people who have the money to pay enough rent can usually buy a house.

My policy is buy and hold. If what you have is in good shape and is bringing in good income--don't get rid of it. If you want to branch into SFHs look well and buy carefully. Fix all immediate repairs, collect the income, update between tenants. Repeat. Use all the known mantras to your advantage (location, location, location, buy the worst house on the best street, buy within 30 minutes drive of your home, etc). Build your portfolio slowly. Keep everything making money.

My perspective is that you going into the TEETH of the worst season....for Buying. I am not totally forgetting the 1031 time frame, but if you can stall things a bit, shop & vies and reflect and WAIT....for the overpriced ones that will still be sitting in Oct. Nov. Dec.

Lynda (TX) has a point with 4 new units to deal with at the same time.

I personally think that if the 8 unit is making good money, I say keep it and use the profits to reduce debt / make new purchases. The income from the 8-unit will help you qualify for new loans, if you want to go that way. Or save up the profits for a while and buy a cheap fixer, one at a time - make it profitable before getting another.

I had a Pittsburgh based realtor calling on a 39 unit place I have that is located over an hour and 20 minutes away from the 'burg. I thought that they were just fishing for listings.

Pace is picking up.

Depending on your age, and the up leg property - doing a 1031 might make sense for you. It will be a challenge to pick up that many SFHs at the right prices so that is the trade off on doing a 1031.

I do like doing exchanges, but they get harder and harder to do the larger the exchange gets. A simple 1031 can run you about a grand, but if you have multiple up leg properties, they might run you an extra $200 for each place.

The same thing is occurring here in eastern PA. The inventory for commercial multis is very tight in my area and cap rates have compressed quite a bit. Although my preference was MFH's, I personally went back and forth about whether my next purchase was going to be a SFH as these deals were more plentiful and then a deal on a six unit came up that I currently have under contract.

I think older MFH's offering modest rent versus the complexes is the place to be right now--at least in my area. Demand will only increase for these types of apartments. Secondly, I find the idea of rehabbing an entire house daunting along with managing separate SFH's in different locations. For me, MFHs just line up better with my time to manage. Also, I think it will be easier to offload the management issue should I choose to do so later down the road. Finally, I like the aspect of forcing equity in addition to getting the cash flow.