What if I cant 1031?

[Jack Sarcia]

I will be closing on the sale of my 3 family next month for 450k and I will be netting about 100K before capitol gains tax.

My problem/question is that my first year of self employed income does not qualify me for loan (from a bank) to go out and buy a property of equal or greater value than the 450K.

I am using a direct mail campaign to find motivated sellers of multi's in my area and I am in search of sellers who will carry back.

Not finding a seller who will carry and not using a private lender leaves me buying a property cash and paying capitol gains tax.

Any suggestions or questions would be helpful. Thank you BP community.

[Bill Exeter]

Hi Jack,

Although it might not fall within your investment goals, objectives and guidelines, you might want to consider investing in a Delaware Statutory Trust (DST). Investors can 1031 Exchange into a Delaware Statutory Trusts. Essentially, the investor buys into the trust as a beneficiary, which qualifies as a purchase of investment real estate. The biggest plus for you is that the properties are put together by a syndicator/sponsor, including the financing. The individual investors do not qualify for the financing. The lender underwrites the property and not the investor. Generally, the holding periods are 5 to 7 years, so it might buy you some time to get your finances and taxes into a health position and then you can 1031 Exchange out of the DST when they sell and into property that you choose yourself. It gives you one alternative that would at least allow you to defer all of your taxes and keep you money working for you.