Cliffs notes are that I own a home that I live in, and also have 2 investment properties (all in Los Angeles).

Property 1: 4-unit. Worth $850-99K with about 450K in equity.

Property 2: 4-unit. Purchased last year. Worth about $800K with about 350K in equity.

After taxes, mortgage and insurance on both properties, I take home about 56K/yr in my pocket free and clear. I manage the properties myself.

I feel that property 2 has a ways to go in terms of upside, both in rents and equity, which is why I bought it. The area is very quickly changing for the better and I believe it will perform well over time. But who knows how much time it will take. 

That being said, I think my money may go further if I use both properties as a downpayment on a much larger building. Say, 16 units or more (?). I'd obviously have to do my due diligence and find the best area, return, ect. I'm in no rush to do this, but maybe within the next year or two. 

Wondering if anyone's done similar and what the process was like, and if it paid off? I know the timelines are very restrictive, but that it can be done with the right research and team. I'm also a licensed agent. Thanks in advance for your help!

@Joseph Ben

The most important information you'll need as you think about 1031 in this situation is what your tax liability would be on each of the properties.  You're right, in thinking about timelines when trying to sell two properties and buy one.  The clock for this will start with the sale of the first property and 45 day identification period for that first property as well as the 180 limit for that one are what you'll have to concern yourself with when trying to do a consolidation exchange.  Depending on what your gain situation is it may be worth your while to forgo the exchange on one or both in order to achieve what you want.

But, if finding the right replacement property seems to be more difficult than selling your old properties and depending on your pent up tax liability it may be worth your while to consider doing a reverse exchange.  You'll still work with a qualified intermediary and its a bit more pricey than a regular exchange but having your next property locked up ahead of time in a hot market can take a lot of pressure off.

Joseph Ben You have some momentum going. I probably wouldn't liquidate both properties. Be strategic possibly sell or refinance one of them then roll into another income producing asset. Frank