Advice for selling multiple properties
My brother and I own an LLC that purchased a 40 unit rental property (10 buildings, each with 4 units). The area we own them in is rapidly growing and we have decided to convert them into condos. If we were to sell all 40 units at that price, it would bring in substantial profits. Obviously, we would like to explore opportunities to roll the proceeds and minimize our tax consequences.
I have been looking into 1031 exchange options and have several questions about what may or may not be possible. The first hurdle I see is that selling 40 individual units would take time and may make it difficult (if not practically impossible), to meet the 45 and 180 day time limits set under 1031 rules. Is it possible to sell just 16 units (4 buildings) first, not worrying about doing a 1031 exchange? Selling 16 units would basically cover the initial purchase price of the 40 units. From there, could we continue renting out the remaining 24 units as we have been doing and possibly sell them down the road and look to do a 1031 exchange then? Technically, we would not have made a profit yet on selling the overall property as we would have just sold enough units to cover our initial investment (unless they revalue the whole property based on the sales comps). Alternatively, would it be possible to sell one building (4 units) at a time and do 10 separate 1031 exchanges (one for each building sold)? If anyone has experience with this type of complication, any advice would be appreciated.