1031 question, Austin, tx

3 Replies

Looking for feedback and ideas. If you had to do a 1031 in the next 6mo. What type of asset would you look for in central Texas?

To place how much money?  Assuming $500k, small multi-family on the east side of Austin. 

Hi Shane,

Couple of other options to think about.  First don't forget that the 1031 doesn't have to be one for one.  A diversification exchange can be a very powerful way to build your RE portfolio.  It is the amount of the sale that is important.  If you're selling for 200K and have 100K in debt you need to purchase at least 200K in real estate and you have to spend all 100K that is generated in Cash to do it (unless youre willing to pay a little in tax).  But that doesn't mean you have to buy one 200K property with 100K down.  If the market in Central TX tells you to you could buy two 100K properties with 50K down on each or four 50K properties with 25K down on each - or any combination you can come up with that buys at least 200K in real estate using 100K in cash.

Another interesting option available to you and maybe one that is attractive given where you live, is that interests in oil and gas production are considered like kind for all types of investment real estate. So if you wanted you could sell your real estate and buy oil interests.  Given that oil has dropped recently there may be a buying opportunity.  Conversely, when oil is high it might be a good time to sell the oil interests and buy more real estate using the 1031.  There's some limitations on quasi-real estate 1031s so check with your QI and accountant first.

Dave

Shane,

I think we need more information before we give you any real idea what to do.  Dave Foster has a good thought with buying multiple properties.  Austin market has gotten really pricey lately.  Would be interested in knowing sales price, mortgage payoff and cash for your sale.

Mark

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