1031 Exchange Into Syndication

[Taylor Hupfeld]

This one is a bit beyond my knowledge of exactly how 1031 exchanges work. I wanted to reach out to you guys for some advice.

I have an investor that I am currently working with that has invested in several other projects with me. He recently informed me that he was selling an old warehouse of his (where he used to run his business out of before he sold it years ago). He was approached by an out of town developer that has offered him quite a bit more than he expected the building to be worth. Naturally, he is not looking forward to paying the capital gains on the sale. My first thought was for him to do a 1031 exchange obviously, but he also doesn't want to take part in the management of a new rental property (which is why he has invested with me as a private investor). I am more than willing to do a similar deal where I find a new property for us to purchase and split the equity of the deal. This would have to work in a way that also satisfies his 1031 requirements. 

Any suggestions would be greatly appreciated. I know there are a lot of creative people out there.

[Taylor L.]

Recommend you search up @Dave Foster's name and "1031 into a Syndication" and "Tenants in Common." Either here or on the Google machine. He's put out quite a bit of very good content on the topic.

[Dave Foster]

Thanks for that shout out @Taylor L., @Taylor Hupfeld if he does a 1031 he has to take title to at least as much real estate as he sells if he wants to avoid all tax.  But the two of you could still go into a property where you each take title to it as tenants in common - as long as he takes title to at least enough to of the property to satisfy his reinvestment requirements.

Alternatively he could 1031 into the property by himself.  But you and he have a separate management entity that runs the property.  And you and he could split revenue as you see fit.