Looking to 1031 exchange........

7 Replies

Looking for feedback on our next venture.

We have looked into these areas, visited east Texas and have been watching the market. However we are not boots on the ground and would appreciate insight from anyone with experience in these areas.

Looking for multifamily 12-24 unit apartment complex/mobile or RV park near Austin Tx, and open to East Tx as well. Approx. sale price of $700k -/+ will be ready to complete transaction by Jan 2022.

This what we are looking for although we would entertain syndication however we are unfamiliar with the details on cash on cash return and the terms. 

Also looking for Texas multifamily broker to add to our list, feel free to name drop recommendations.

Using 1031 funds to invest in a syndication can be complicated. In short, to do it you have to create a TIC (tenant in common) structure. Which requires the operator/syndicator to alter their operating agreement documents. Also, the timing will have to line up perfectly. It is doable, but likely will have to be with an operator you have a good relationship with that is willing to do the extra steps.

From what I have been hearing it may be a little easier to take the "tax hit" and simply withdraw the amount of cash necessary from the 1031 and apply those funds to the syndication. A couple of syndicators I have talked with have said what Brock just said and it may not be worth it for them to change their operating agreement.

@Jessica Riggen just to clarify, Austin and east Texas are not near each other, so you'll need completely different brokers for each area. Plus, east Texas (everything generally east of I-45) is huge and broken into several markets from north to south. If you need a connection to a commercial multi-family broker here in Austin, I'm happy to connect you. Shoot me a DM.

What about Taylor where rumblings of the new Samsung chip plant are going in. They wanted to be In Austin but Austin did not want to give the tax credits they were seeking. They chose Taylor because about 30 minutes away and got huge tax breaks over a decade and Austin not too far away to pilfer talent to work at Samsung new facility.

Prices likely less than Austin and maybe get in on the ground floor of the up wave of a smaller town landing a big business that might make the area boom.

I have a lot of syndicator friends and I am one on the commercial retail side. To take 1031 money is a big PITA. It's non optimal especially small amounts likely being talked here. If someone is coming in with big money like 4 to 10 million or more proceeds being placed then a syndicator might look at it on a deal to deal basis. Most 1031 money looking at TIC or DST model and generally must be accredited status. There are certain rules. No legal advice as a bunch of nuances to it.

45 days GOES FAST on a 1031 exchange. Treat each day like it's the final day to find something that is the urgency that is needed to help with success because LOI might take 1 week, purchase and sale 1 to 2 weeks, due diligence more weeks. Plan on trying to get solid property where just checking down to close before 45 day ID period ends for 1031 and then have other 2 slots maybe 1 for other property and 1 for nuclear option like going into a DST.

There are some syndicators that take non accredited money but getting approved can sometimes take up to 1 year with the SEC and cost hundreds of thousands of dollars so it's non optimal to a syndicator because of possible increased litigation, time, and costs which can hamstring a syndicator for buying velocity of deals.

I only want accredited investors for my value add deals.

Originally posted by @Jessica Riggen :

@Ryan Kelly, thanks we are well aware of the geographic locations. We are moving to Tyler but would rather invest near Austin. I know the market is growing there.

 Welcome to East Texas. 

@Ryan Kelly i am also interested in investing in multi-family in or near the austin area. any investor friendly brokers you can refer would be greatly appreciated.