At our Not Your Average Investor Summit, one of our most engaged community members asked a question that I know a lot of investors have wondered about:
Does it make sense to 1031 exchange out of a high-maintenance property and into a new construction home?
It was a great question, and it came from Michael Santorios, one of the most experienced investors in our community.
Michael has been investing with JWB since 2016. He owns 13 rental properties, is a JWB private lender, and his family is one of just 42 JWB clients who have earned over $1 million in profits.
So when Michael asks a question like this, it’s worth paying attention.
The Question Every Long-Term Investor Asks
Michael started by doing something many smart long-term investors do: he reviewed his portfolio by lifetime cash flow per property.
And when he laid it all out, he noticed something interesting.
Some properties had produced several hundred dollars a month in lifetime cash flow. Others were much lower. A couple was even negative, including 7447 Skye Dr N at about ($133/month) in lifetime cash flow. Meanwhile, other homes in the portfolio were producing $400, $800, and even over $1,100 per month.
That doesn’t automatically mean anything is wrong.
But it does raise a very reasonable portfolio question:
If one property has produced less cash flow than the others and has also required more maintenance along the way, should you keep it or 1033 exchange into a newer home?
That’s the question Michael brought to the table.
👉 Should You Swap Out a Rental Property? Here’s the Question Investors Ask
And I think it’s exactly the kind of question experienced investors should ask.
Skye Drive: Case Study
The property Michael was evaluating was 7447 Skye Dr N, which he bought in 2019 for $138,000.
Yes, it had some painful moments, including one major electrical issue in 2025 that cost about $15,000.
And yes, that pain showed up in the rental income line.
But when we looked at the full picture, the results told a very different story:
The property doubled its projected return, from 9.0% to 18.2%, even after absorbing that $15,000 electrical expense. And the reason comes down to Home price appreciation, which doesn’t show up in monthly cash flow statements.
The home appreciated at 6.9% per year, and rent climbed from $1,000 to $1,479, both ahead of Jacksonville’s historical average. When you see both of those numbers moving together over 7 years, the full picture looks very different from the cash flow line alone.
👉 A $15,000 Repair Bill — and the Property Still Doubled Its Return
In other words, even with an unexpected, high-priced maintenance item, this property has been a home run investment, significantly outperforming the Jacksonville market average of 4.8%.
Then we compared Skye to a potential brand-new replacement property.
And this is where the real lesson came into focus:
Replacing a property has little to do with past performance and everything to do with future returns.
Why?
Because the seasoned property, even with all its maintenance expenses, had already benefited from years of rent growth.
- $17,748 Annual Gross Rent: Because Michael has held Skye for 7 years, he is collecting “market rent” on a much lower original purchase price.
- 7.2% Cap Rate vs. 4.0%: This “yield” metric shows Skye generates significantly more relative income than a new property would.
- 18.2% IRR vs. 12.4%: The total annual return across all five profit centers shows that Skye is generating nearly 50% more return per year than a replacement property would today.
And that’s before accounting for the cost to sell.
To sell Skye in today’s market, the estimated cost was $57,316. Even with about $15,000 in incentives on the new purchase, the cost to sell was nearly 4x the value of any incentive a new purchase could offer.
Questions Before You Sell Anything
This episode was a great reminder that we have to detach from the emotional side of rental property investing if we want to make the best long-term decisions.
A recent repair bill can make a property feel like the wrong fit.
But better questions are:
- What profit centers am I giving up if I sell?
- Will the replacement actually produce more cash flow?
- What are the real costs of selling?
- And is the new property actually a better investment… or just newer?
One more important point:
Past maintenance does not dictate future maintenance.
In Skye’s case, the major repair had already happened, and the roof, HVAC, and plumbing are all less than 10 years old today.
Because often, the property you’ve already held for years is the one that’s best positioned to keep rewarding your patience.
Not Your Average Insight: Patience Is a Profit Center
👉 Stop Letting Emotions Make Your Real Estate Decisions
The question isn’t whether a new construction home is a good property.
The better question is: Which decision puts you in the strongest position going forward?
And many times, the answer is to keep the property you’ve already owned longer.
Because rental properties get better over time.
Returns improve.
Rents grow.
Appreciation compounds.
And the friction of selling can wipe out a lot more value than investors realize.
That’s why it rarely makes sense to exchange a seasoned property for a new one unless you’re looking to change operators and/or markets.
And so Michael decided to keep the property.
And I think that was exactly the right long-term move.