Hey, real estate investors … If you’ve been grinding away with small rental properties and wondering, Should I sell and trade up? Should I hold for the long haul?, you’re not alone. My wife and I have made the decision to sell off all our small real estate deals to buy bigger multifamily properties, and I want to share why.
Get all the details in my video here: Why I’m Selling ALL of My Small Multifamily Apartments
Why Start with Small Real Estate Deals in the First Place?
First off, I’m not knocking small real estate deals. If you’re just getting into real estate investing, starting small is a great way to test the waters. You’ll learn if real estate is right for you, figure out how to manage properties, and—most importantly—start treating it like the business it is.
But at some point, you have to ask yourself: What’s my end goal?
Related Video: Why You Should Start SMALL with Real Estate Investing
Related Article: One Small Apartment Deal Can Change Your Life
Define YOUR End Goal – Why Are You Investing in Real Estate?
Did you become a real estate investor to build generational wealth? Do you want a portfolio of paid-off rentals to pass down to your kids? Or is financial freedom your goal—so you can work ON your business instead of being stuck IN it? The answer to these questions will guide your next move.
For me, the goal has always been growth and scalability. My wife and I value financial freedom and we’re looking to create generational wealth.
Get your FREE copy of my e-book here: The New Rules for Financial Freedom
The truth is that small real estate deals are great, but they can only take you so far. They can also be very management-intensive, especially if your properties are spread out geographically.
Larger multifamily assets allow you to hire your own property management team and centralize operations so you’re not spread so thin. This frees up your time but also valuable resources that you can use to continue growing your real estate portfolio.
When Does Selling Your Small Real Estate Deals Make Sense?
Here’s a key piece of advice I learned from one of my own real estate mentors—if you can sell a property today and walk away with more profit than you’d make holding it for the next 10 years, it’s probably time to sell. The key is looking at your cash flow and equity to see if that money could be working harder for you elsewhere.
Sell Your Small Real Estate Deals and Use the 1031 Exchange to Trade Up Without Paying Taxes on Profit
One of the biggest advantages of selling your small real estate deals to buy bigger properties is using a 1031 exchange. This allows you to sell your current property and reinvest the profits into a larger deal—without paying capital gains taxes. Tax laws favor trading up, so why not use that to your advantage?
Related Video: How I Used the 1031 Exchange and Off Market Deals to Go From 0 to 131 Rental Properties
Key Takeaways for Real Estate Investors
Whether you’re a new real estate investor or you’ve been doing it for years, these are my top tips for helping you be successful and make money with real estate investing:
- Get a coach or mentor. Learning from someone who has already done it can save you both time and money. Why waste your efforts on trial and error when someone else has already been there and done that?
- Take action. Even imperfect action is better than waiting on the sidelines. Don’t wait until you think you know everything before you get started with real estate investing.
- Start where you can. Don’t get caught up in waiting for the “perfect” deal—get in where you fit in.
- Leverage your equity. Learn how to pull equity from one deal to fuel your next investment. My wife and I have followed the BRRRR Multifamily Strategy to get our original capital out of our real estate holdings to then fund even bigger deals.
- Be willing to trade good for great. The unknown is scary, but growth doesn’t happen without stepping outside your comfort zone.
- Take calculated risks. Be willing to bet on yourself, because no one else will do it for you.
Is It Time to Scale Your Real Estate Investments?
If you’re serious about leveling up your real estate investing game, let’s talk. Whether you need one-on-one coaching to evaluate your real estate investments or want a simple checklist to evaluate a multifamily deal, I’m here to help!
You can also reach out to my team at Stephan Group Real Estate to find the best multifamily real estate deals in Metro Detroit. Let’s work together to make your real estate dreams a reality!
