Set up of first 1031 Exchange
Hi,
Although I have several rental properties, this is the first time I will sell one of them in US. I'm selling a Condo in Florida to invest that capital in Houston. The plan is to set this up as a 1031 Exchange. I'm reaching out to the community for advice regarding the process, referral of people that can help me set this up and to highlight anything that I might be missing. I'll describe the transaction below:
- Selling a 2/2 condo in Miami's Coconut Groove for 297k$ as a cash transaction. Contract executed with the seller already. This property was purchased in 2013 for 227k$, has been cash flowing (~900$/month) as a rental since then.
- The proceeds from the sale will pay the renaming mortgage balance of ~112k$ plus closing costs and realtor fees for a net balance after the sale of ~165k$.
- The seller in Florida selected the closing company, I will have a separate person represent me as my closing agent, however, he worn't deal with the 1031 Exchange part of it
- After selling the condo I will invest in 3 Single Family Residence (3/2) priced around 100k$ each. Note that I source my properties in Houston from local wholesellers and usually the decision to purchase is done within the next 24 hours after the deal is presented. So, I don't have identified the properties I will purchase yet. I understand that as per the rules, I have 45 days after closing to identify the properties and 6 months to buy them, so this will be tight.
- For the acquisition I'm planning to use the 165k$ net balance after the sale + a separate ~150k$ loan backed by I stock account that I'm just getting worked out with a local bank. The plan is to refinance the properties to get 70 to 75% of the money invested out as quick as possible after the purchase so I can buy more properties.
Based on the plan above, can you give me your feedback specifically on:
- Are there any glaring omissions or important show stoppers I'm missing
- For the people that has done similar exchanges (1 property for 3), how have you set this up in the past
- Who should I get in contact with? Real Estate Attorney? Company specialized in 1031 Exchange? The title company of the seller?
Your advice is highly appreciated.
Thanks, Carlos