What would you do If you had 1031 exchange $ to invest in 8 days?

6 Replies

If you had $264K cash in a 1031 Exchange to spend on a value add & cash flowing deal, where would you look? The deal would have to me a minimum of $525K. If you had a week to invest, what markets would you invest in? Who would you talk to? I would think Indiana or Ohio, but what would you do?  I'm open to all ideas and options as long as it's not illegal.

Thanks for your perspective,

Amy

@Amy Lingenfelter  I would buy a cabin in Pigeon Forge/Gatlinburg/Sevierville as a vacation rental. At a >$525k price point you could get a cabin that could gross at least $80k annually and very likely hit six figures for annual revenue. It wouldn't be a value add deal, but can't beat the cash flow.

They're easy to manage, too - you do not have to be local, all you need is a great housekeeper and a smart phone.  I have three in the area that I bought while I lived in California, super easy to deal with.  

Good luck! 

@Amy Lingenfelter how much time do you want spend? Are you going to be active in overseeing the investment or would you prefer to be more passive? Vacation rentals can be higher touch and require more time compared to a long term rental, apartments or a commercial building. Even if you hire a manager for your vacation rental you will most likely have to field calls or questions from them. 

@Amy Lingenfelter why is there only one week to invest? Sounds like you might be within the last seven days of your identification period (45-day window after sale). If that is the case, you still have many options to identify multiple properties by day 45, then an additional 135 days to close.

This late in the game, the questions always include will the prooert(ies) I identify close (pass inspection, get financing, etc.).

A Delaware Statutory Trust (DST) might fit the bill for the accredited investor since financing already exists, and DSTs will always close. Most are cash flowing from day one.

A motivated/desparate buyer rarely makes a good purchase.  $264k isn't millions.  Don't let deferring a few bucks in taxes and recapture wag the whole investment. 

7 days to close or 7 days to identify?  

The deadline has been looming for a while.   What other research have you done?  Just randomly naming two cold and snowy cashflow markets?  What asset type do you like?  How involved do you want to be?   How far are these markets from you?  Know a good PM? Have a team?  Did you eat lunch yesterday?

What would I do if I had 7 or 8 days left?  Rely on my previous research and be gliding into the home stretch vs starting from scratch like it's the first month of 4th grade at a new school or something. 

@Amy Lingenfelter , If I had a client with 7 days left in their ID period and they did not already have a target property let alone a target market I'd echo what @Steve Vaughan said.  Pay the tax and plan earlier next time.  If you don't turn in a l45 day list you'll get your proceeds back on day 46 can have the next 10 months to invest them to at least partially offset your tax.  The amount you don't save this time around could pale beside the amount you could lose in making the wrong purchase.

It's not the deal you don't get get that kills you.  It's the deal you do get that you shouldn't have gotten.