Feedback Requested for Reinvesting 1031 Exchange Funds
Hello BP community,
I've been on BP for about one month and I'm addicted to it. I'm learning so much reading the forums and listening to the podcasts.
I'm new to RE investing as far as investments for cash flow but I've been buying condos and homes for my primary residence since 2002 in San Francisco. The last house my husband and I bought turned into a rental and we plan to sell it next month. We're selling because it's a good time to sell and we think we can get better returns elsewhere. (Also, we recently moved to the Seattle area.) We plan on doing a 1031 exchange and anticipate the reinvestment amount to be about $1.5 million.
I would appreciate any feedback on our plans to reinvest the 1031 exchange funds. (I would say our risk tolerance is moderate to slightly aggressive, and our long-term goal is to have passive income.) We would like to purchase a small apt building locally (Tacoma) for about $1.2mm, and invest the rest in single family homes in the Kansas City area for steady cash flow. I'm concerned that we would be spending the bulk of the funds in an area that I think is overpriced or difficult to find a good deal in a tight timeframe. (We'll need to identify the new property within 45 days of the sale of our house.) So, our other plan is to spend $1.2mm on a fixer buy and hold single family in San Francisco since we know the market better there and we believe the house would appreciate a lot faster in SF.
So, what would you do?