{"id":170665,"date":"2024-04-17T14:58:19","date_gmt":"2024-04-17T20:58:19","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=170665"},"modified":"2024-06-03T04:24:08","modified_gmt":"2024-06-03T10:24:08","slug":"1031-investor-journal-four","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-four","title":{"rendered":"I\u2019m Four Months Into a 1031 Exchange\u2014Now It\u2019s All About Finding the Best Deal in the Haystack"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC1771184033\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">We are less than a month away from&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-one\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">listing our Brooklyn, New York condo<\/span><\/a><span data-preserver-spaces=\"true\">, which we bought for $375,000 back in 2004, the same week we got married. 20 years, two kids, and one chocolate lab later, we are selling the condo for something close to $1 million and then flipping the profits into a new investment via a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-exchange\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">1031 exchange<\/span><\/a><span data-preserver-spaces=\"true\">. (New here?&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-one\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Catch up<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;on the last few monthly missives!)&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">As a reminder, we haven\u2019t made much cash on this property over the past 20 years. The growth has been all equity\u2014and now\u2019s the time to cash in!<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">So far, we\u2019ve&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-two\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">locked our Brooklyn sell team<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and had some great meetings with developers and realtors in our top five markets, which include:<\/span><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">San Antonio<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Dallas<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Cleveland<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Jacksonville<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Tampa\/St. Petersburg<\/span><\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Deal Flow<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">We\u2019ve started to see deals trickle in. But we realized last month that we just weren\u2019t seeing enough properties to make good decisions, so we re-doubled our efforts to widen the deal fire hose even more. We went to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/agent\/match\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">BiggerPockets Agent Finder<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and searched for agents in our target markets. Then, I spent the next week or so having live conversations with each of them, sharing our buy box and desire to see more great options. That certainly did the trick: Now, my email inbox is full of potential multifamily deals, ripe for underwriting.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Getting Good at Underwriting&nbsp;<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">We made a goal this month to underwrite at least 50 properties that could be real contenders. We\u2019re not there yet, but this has already helped us in multiple ways:<\/span><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">It got us much better at underwriting.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">It allowed us to see patterns so we could easily eliminate properties by glancing at the initial numbers without going all the way through full underwriting.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">It gave us a much, much better sense of the lay of the land.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">To sleep better at night, we realized we wanted to be conservative with our estimates across the board.<\/span><\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Targeting New Builds<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">One thing we learned doing this is that if we want a turnkey, newbie-friendly new build, at least for the first few years of ownership, we probably won\u2019t be able to hit our 5k cash flow\/month goal in every target market.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">New builds have advantages and disadvantages: They often mean less headache initially and certainly less spent on capex and maintenance. In some cases, they also mean purchasing directly from the developer, who can buy down interest rates\u2014an amazing advantage in this environment.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">They also have drawbacks. When you close, they are, of course, empty. All that underwriting and those cash flow per month calculations don\u2019t come true until you fill the thing with tenants. You hope that happens in a few months, but you never know. Likewise, rents are unproven. You can and do take your best, data-backed guess, but until your first tenant signs that first lease, you just never know. And, of course, you pay closer to top dollar for new builds since the work has all been done for you.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">We had to decide what new builds were worth to us.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">We\u2019ve also been looking at older buildings with existing tenants (and presumably existing building issues) with better cash flow. But we continue to be wary about taking on too much for our first big out-of-state purchase.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Here\u2019s One Of The New Build Deals We\u2019ve Been Circling:<\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Brand new, eight units, 2.2 million purchase price (we should have around 850k cash to put down).<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Units are 3\/2.5.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Medium to high appreciation market (we have been using 2%\/year in our calculations, but it should be much higher).<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">The developer is buying down the rate significantly.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Opportunity for MTR (medium-term rental) if we have issues getting LTR tenants.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">We worked property management into the analysis.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Cash flows about 4k a month after stabilization.<\/span><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">It may not be a home run, but it could be a solid base hit to get us started. What do you think?<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><span data-preserver-spaces=\"true\">Our 1031 Journey So Far:<\/span><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-one\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">January: Selling our Condo, the Beginning<\/span><\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-two\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">February: Getting the sell side situated<\/span><\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-three\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">March: Is a 1031 Exchange Really Worth It?<\/span><\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">This 1031 diary will be a monthly series through 2024, chronicling our journey to a (hopefully) successful and profitable 1031 exchange kicking off in May. We\u2019ll share everything\u2014all the numbers, the analysis, the good decisions, what we wish we\u2019d done differently, the big mistakes (hopefully not many), and everything in between. Have questions? Got advice? What are we missing? Share in the comments below!<\/span><\/em><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_36db009851582729dc139f1250c72ab7\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_4526a4459ca8b35c67b18ef712fc3622\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_d95f088474534a2947d12599cee7ed02 class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/agent\/match\"\n        x-on:click=\"window.analytics.track('Blog Block | B2C Marketplace Agent Finder', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-four',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color wp-block-paragraph\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/signup\"\n        x-on:click=\"window.analytics.track('Blog Block | Acquisition | Free Membership Signup', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/1031-investor-journal-four',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>We are less than a month away from&nbsp;listing our Brooklyn, New York condo, which we bought for $375,000 back in 2004, the same week we got married. 20 years, two [&hellip;]<\/p>\n","protected":false},"author":613680,"featured_media":170655,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7359,7119],"tags":[],"class_list":["post-170665","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-1031-exchanges","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/170665","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613680"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=170665"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/170665\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/170655"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=170665"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=170665"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=170665"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}