1031 Single Property to Multiple Properties Strategy

2 Replies

I am looking into selling a single property and using the proceeds in a 1031 exchange to purchase 2+ properties.  My question for those that have done this or are familiar is what is the better strategy....1) Identify and purchase multiple properties in the 1031 exchange or 2) Purchase the first property in the 1031 and then after the needed seasoning period, do a cash out refinance and then purchase the second property.

I am not sure if one strategy is easier or more cost efficient than the other?  Obviously, if multiple properties can not be identified in the 45 day time period that makes the decision for me.  

Any insight from the experts would be appreciated.  Thanks!

I would think that the fees required to set up the 1031 would be offset better by purchasing two or more at the same time. However, you'd have to talk to the exchange company about that... 

@Chris T. , This doesn't have to be an either/or I don't think.

1.Most intermediaries only add a small charge for a second purchase so you can do a quick comparison of 250 - 500 for a second purchase in the 1031 vs the costs of the refi loan.

2. As long as the first property you buy can potentially absorb the entirety of your exchange reinvestment target there's no reason to make an immediate decision.  If another property crops up in the 45 day period then identify negotiate and buy as part of the exchange.  If not then use all your proceeds for the first purchase and move to the refi plan.

3.  There is no "seasoning period' after completion of your first purchase for you to refinance to buy something else. So you can immediately access the equity in the replacement property to purchase another property if you choose.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here