Multifamily 1031 exchange

7 Replies

I’m looking to find a like-kind multifamily property in the $300-$375k range. What are the best markets for cash flow??? I’m currently looking in Cleveland, columbus, STL, and detroit.

Also need a reputable mediator!

Originally posted by @Justin Franklin :

I’m looking to find a like-kind multifamily property in the $300-$375k range. What are the best markets for cash flow??? I’m currently looking in Cleveland, columbus, STL, and detroit.

Also need a reputable mediator!


 Hi Justin, I'm a big fan of Columbus. Cleveland will likely cash flow better than Columbus. Columbus will likely appreciate more than Cleveland. I can send over a recommendation for a good mediator. 

@Justin Franklin , There are a number of good qualified intermediaries right here on BP.  The location is not going to be important since 1031 is. federal statute practiced the same everywhere.  You want to remember that your QI must be in place prior to the closing of your sale.  And you can't take title to your new property until your old property closes.  So if you're looking for replacements you're probably getting close to your sale and now would be a good time.

Many title companies will have a QI that they work with.  Or a large firm that is also owned by title company and they refer business out.  In these cases it is probably a nationwide firm like most.  You'll get a better answer on quality asking the escrow closer directly who they've worked with and how they liked them.  

The two key relationships are you and the QI and the closer and the QI.  Here's an article on typical costs that may be helpful - https://www.biggerpockets.com/...

Originally posted by @Justin Franklin :

I’m looking to find a like-kind multifamily property in the $300-$375k range. What are the best markets for cash flow??? I’m currently looking in Cleveland, columbus, STL, and detroit.

Also need a reputable mediator!

 Columbus has a good mix of cash flow and appreciation.

Appreciate the tag, @Alex Olson

@Justin Franklin would this be your first 1031 exchange?  BP has a lot of strong voices in this space. To reiterate what @Dave Foster said, make sure that your 1031 intermediary is established prior to your sale closing. You want to get those ducks in a row early. 

A few notes as you look around:

  • Whatever you buy in your 1031 exchange must be at least as valuable as what you sell.  If you miss this mark, the difference is taxable. 
  • Don't disclose to potential sellers that you're in a 1031 exchange.  It'll scare off those who don't understand them, and it'll provide leverage to those who do. 
  • Check for client reviews and agency ratings for the intermediary you elect to work with.  See if you can get them on the phone.  There are horror stories every now and then about a 1031 guy who runs off with clients funds...no good!