Elderly father in law did a 1031 three years ago when he sold his dairy, he was a wonderful dairyman but landlording 8 townhomes has become too difficult and isn't meeting income needs.
Trying to avoid taxes, but needing the income increase, what suggestions do you *been there, done that* folks have?
Foreclosure fix & flips and lots with new builds are the direction my partner and I are going, am I missing an obvious way to bring father in law in on short term sell for profits, with respect to his 1031?
Thanks, I need advice so I can give it.
You can’t do a 1031 exchange in to a property you plan to sell. No matter if it’s a fix and flip or a build and sell. The intent of the purchase must be ‘To hold for productive use...”
Pry just keep his investment separate. Maybe another 1031 in to fewer buildings or a larger MFH that can support onsite management if it's enough money. You could talk to some experts about NNN leases or DLST, problem is most of the experts are dying to sell you one and will assume they are perfect for your needs, whatever they are.
@Julie DeWolfe Arroyo , The short term nature of what you're contemplating is what will keep your father from getting involved. As @Bill Brandt said, your intent must be to hold the property for productive use. Increasing income and reducing exertion is a tough two fer. Can you take over the town homes?
At the very least you could sell those townhomes 1031 and purchase 8 single family homes and increase NOI by maybe $1000 - $2000/month just by getting rid of HOA. A consolidation exchange where you combine those 8 into one larger MF that is easier to manage or hire management. Or the move into commercial NNN properties or fractional DSTs. Although these last two are not necessarily going to increase NOI. But they will simplify management which will probably have an impact on vacancy and indirectly on NOI.
@Bill Brandt right. Appreciate your insight.
@Dave Foster good suggestions, will consider it.
@Julie DeWolfe Arroyo . Good commercial NNN lease properties are returning 4-5% these days. You can 1031 into them...