1031 Exchanges

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Lara Witter
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Leveraging 1031 Exchange for Florida Properties

Lara Witter
Posted Nov 2 2022, 15:44

I have 2 Florida investment properties- in St. Petersburg and in Orlando- that have negative cash flow (due to flood insurance costs and rehab), but have experienced a lot of appreciation since 2015. So, I am looking to do a 1031 exchange for each.

1. In St. Pete's: $340K net sales price, no loan, $28K of depn

2. In Deltona, $165K net sales price, $22k depn

How do I best leverage these assets /proceeds into more investments in other states? I'd like to buy 2-4 more properties. 

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Dave Foster#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
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Dave Foster#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
Replied Nov 2 2022, 18:43

@Lara Witter, It's a great time for you to be looking at the 1031 right now.  Since FL has been granted an extension for time sensitive filings.  Your identification period is extended to Feb 15 of 2023.  That's a lot of time to shop around.

Your reinvestment requirements for the 1031 will be to purchase at least much as your net sale ($505K if you want to combine the two exchanges).  And you have to use all of the cash proceeds.  It sounds like the first one is debt free.  I can't tell if the second is as well.  But the important consideration is that you can allocate those proceeds in any way you want.  So you could buy one or two properties free and clear.  And buy two more with maximum leverage.  How you combine it does not matter.

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Lien Vuong
  • Real Estate Agent
  • Boston, MA
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Lien Vuong
  • Real Estate Agent
  • Boston, MA
Replied Nov 2 2022, 20:53

If you'd like to explore STR, you can purchase one of them under second home loan for 10% down which reduces the cost of the downpayment so it eats less into your $500k liquid cash. What you want to know is how much you're selling the assets for because that dictates your minimum replace price, NOT your net proceeds.