Duplex

My wife and I currently own and live in a Duplex in a very desirable neighborhood in the Midwest. We are looking to start a family and move out soon (it’s a 1 bedroom unit), we currently have a 15 year mortgage on the home, my plan is to roll the 135k (35% of the value) of equity we have and refinance to a 30 year mortgage.This is the only way we would ever be able to make the property cash flow. It’s a very nice property in a great area of town I would say it’s a class A property all day long. There are single family homes on my street going for 700k-800k which for the Midwest is pretty good when the average home is about 400k in our city.

Here are the numbers every month.

Rents: $2,850.00 Mortgage (estimated with 6.5% interest rate): $1,521.00 Vacancy (5%): $143.00 Property tax: $500.00 (it’s just shy of 6k a year rounding up in this) Maintenance (5%): $143.00 Water / sewer: $150.00 (rounding up, single meter so we will have to front this bill) Insurance: $167 (rounding up, $2,000 a year) Cash flow: $226.00

I plan to manage the property myself for the time being.

Based on these figures not counting any appreciation im looking at 9.25IRR, and a cap rate of 5.65% which I’m not crazy about but however I do know the neighborhood we are in will appreciate and I am not counting any appreciation in that calculation.

I’m looking for recommendations on whether I should let go of this property and sell it and roll the equity into a 4 family to gain more positive cash flow which is very possible in the area we are in to do. Or should I just keep it, and let it ride for the next 30/40/50 years we are in our mid 20’s.

My goal is to get more aggressive in my real estate investing. Any insight will help. Thanks.