1031 Exchange cash Buyer looking for more ideas

Starting Out
14yFollow

1031 Exchange cash Buyer looking for more ideas

Darron Chadwick
Real Estate Investor · Carmel, IN · Member since 2010 · 15 posts · 1 vote

hey all not sure where to post this question
We recently sold a duplex in downtown Indianapolis using 1031 currently looking for like properties in northern suburbs of indy, but could entertain other ideas. We are still new to the investing thing and looking at getting more involved in it. any ideas?

0Reply
38 views

13 Replies

Jump to latestLatest
  • Ryan M.
    West, MI · Member since 2012 · 674 posts · 182 votes
    14y

    If you sold this should have been done in the identification period prior to selling. Your now in the exchange period. 180 days till close and the clock is ticking. This has to go like clock work or its null. When we complete a exchange we have a very defined timeline with drop dead dates along the way. But prior to the sale the path is already laid out.

    0Reply
  • Account Closed
    Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
    14y

    Dis you have an exchange facilitator helping you with the transaction? Sounds like you may have created a taxable sale based the information you have provided.

    Like Ryan said 1031 exchanges must be handled properly otherwise they won't be recognized.

    0Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y

    Anyone have a link to a site that spells out 1031 Exchange rules more plainly than the IRC?

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y
    Originally posted by Jon K.:
    Anyone have a link to a site that spells out 1031 Exchange rules more plainly than the IRC?

    I used this company:
    http://www.1031corp.com/1031-exchange-resources/

    0Reply
  • Darron Chadwick
    OP
    Real Estate Investor · Carmel, IN · Member since 2010 · 15 posts · 1 vote
    14y

    Guys, yes we have an exchange facilitator helping us. we identified 3 properties 2 ended up being short sales and didn't want to chance it and the 3rd is over priced has been on the market for 280 days we made a cash offer 17% below asking with no acceptance, yes I know the clock is ticking. Our facilitator says get out there and find something or else we will be looking at a taxable event. our funds are currently being held by Chicago title. I was just curious as to other ideas of investment properties, I know we have to purchase a like property but wasn't sure if it has to be a duplex or can it be a retail or commercial property or can we purchase single family homes to rent out, I think the latter is probably off limits

    I just looking for different stratagies

    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    "Like kind" covers many properties including commercial.So you can exchange it one if you like.

    How much do you have to exchange and how much money do you have to put with it??

    Example 500k to exchange with no extra cash or 500k with 300k for 800k all in.

    Do you want financing to leverage yourself or exchange with paying all cash for the property??

    A big problem I see is people exchanging trying to use their attorney or real estate broker to hold the funds.

    With a few exceptions all of these are considered disqualified parties:

    A close family member or a controlled corporation,partnership,or trust.

    OR

    Employee,attorney accountant,investment banker or broker,real estate agent or broker.

    If you use these people you can get disqualified from the exchange and create a taxable event.

    You have to use a proper QI or years later you can get a nice surprise from the IRS.

    Some clients have asked me and I tell them they need to place the funds and the whole process with a proper QI.

    No legal advice

    Podcast Guest on Show #47
    NNN Invest53 Reviews
    WebsiteView Page
    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    14y
    Originally posted by Darron Chadwick:
    ... I was just curious as to other ideas of investment properties, I know we have to purchase a like property but wasn't sure if it has to be a duplex or can it be a retail or commercial property or can we purchase single family homes to rent out, I think the latter is probably off limits

    I just looking for different stratagies

    Real estate is like other real estate in most cases for a 1031 exchange. You can't 1031 exchange real estate for factory machinery or a truck. Your QI should be able to give you some guidance here. I assume that your funds are being held in an interest bearing account; if not, then you should evaluate finding another QI in the future (can't change that for this exchange).

    0Reply
  • Ryan M.
    West, MI · Member since 2012 · 674 posts · 182 votes
    14y

    Shorts are a no go for a exchange. The timeline is way to unpredictable.

    0Reply
  • Darron Chadwick
    OP
    Real Estate Investor · Carmel, IN · Member since 2010 · 15 posts · 1 vote
    14y

    so here is another way of thinking or more questions just a true newbie here. So we have named 3 properties 2 witch will not work the third is a duplex currently rented rents are 795 and 850 asking price is 160k. we have done the duplex route before and it was good for us but our Financial advisor suggests spreading the money around like getting 3 duplexes for 175k and hiring a PM to take care of the proprieties any ideas on this strategy

    0Reply
  • Mike McKinzie
    Investor · Westminster, CO · Member since 2009 · 1k+ posts · 1k+ votes
    14y

    One duplex vs three duplexes? Split the different and get 2 duplexes. Pay one down fast, till it is F and C or nearly so, refinance and get more. Also, look outside your area, it will give you a lot more choices. I think between all BP members, there are rentals owned in all 50 states, and in foreign countries. I have property in six different states, but all out west. I didn't really start seeing a great return until I left California as a place of investment.

    0Reply
  • Darron Chadwick
    OP
    Real Estate Investor · Carmel, IN · Member since 2010 · 15 posts · 1 vote
    14y

    These would all be free and clear According to our 1031 I have to spend 145k or more, so we have been looking in our local area but have started to look at smaller towns outside of the Indianapolis area just trying to stay close that seems to be my comfort zone for now thanks for the help

    0Reply
  • Bill ExeterBusiness Member
    1031 Exchange Qualified Intermediary · San Diego, CA · Member since 2008 · 1k+ posts · 1k+ votes
    14y

    The key is that you must acquire property that is "Qualified Use" property. Qualified Use property means that the property sold and the property acquired must be held for investment, rental or use in a trade or business. As long as you meet this requirement, any kind of real estate is like kind to any other type of real estate. So, you are wide open in terms of the type of real estate (asset class) as long as you are holding for a Qualified Use.

    Exeter 1031 Exchange Services, LLC and Exeter Trust Company4.726 Reviews
    WebsiteView Page
    0Reply
  • Darron Chadwick
    OP
    Real Estate Investor · Carmel, IN · Member since 2010 · 15 posts · 1 vote
    14y

    thanks for the help all. we originally planed on just buying 1 duplex with the exchange funds but identified a triplex , a quad and a duplex during our 45 day identification period. We are now on our way we have an accepted offer on the triplex and in negotiations for the duplex. I can't thank you folks enough for changing my thinking

    ill keep you all posted as the process get completed

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free