1031 exchange, investment exchange, or....any ideas?
Hello everyone! We just went under contract for a property for $425k. I'm trying to decide if I should just use my cash for a downpayment or 1031 one of my properties for the downpayment. The one I'm thinking about 1031ing is a multi-family worth about $575-600K. After the sale, I'd have around $225K to push forward. The new property does need work. I've been reading about the "investment 1031" and it sounds expensive and stressful with the 180 time frame. :-) Plus we like to do the work ourselves because A. we like it and B. we know the quality of the work. Also I don't if we could even do the work ourselves with an "improvement 1031"? Anyone know? I acquired the current multi-family property through a 1031 exchange so the basis is quite low around $140K. I'm trying to understand how this might affect the new property basis? If we didn't do an improvement exchange, we would have to find two replacement properties but (if I'm understanding everything correctly) my budget would be around $200k-ish for the new property. There is VERY little around that price point in my area. My 4-plex cashflows well but I'm feeling nervous about the economy and more eviction moratoriums under the new president. I tend to be pretty conservative/cautious because I wasn't in 2005-06 and paid for it. The multi-family is in a lower income neighborhood and, while, I've not had a lot of problems, I'm just sort of over it. I almost sold the multi-family and take the tax hit to pay off my personal residence but my realtor convinced me that was not a good idea (we'd owe about 60k taxes that way). I thought it over a long time and then my dream property popped up and offer was accepted even though we weren't the highest. So now I have to make a decision within the next day or two. I'm not looking to build excessive (<--I know,that's relative) wealth I just want to retire comfortably and early. Any advice or thoughts are welcome! (Note: we have an extra long escrow for the new property so I have time to sell the old one.) :-) Thanks!