Boston property vs 1031 exchange to turnkey REI
Boston, MA · Member since 2024 · 3 posts · 5 votes
Boston property vs 1031 exchange to turnkey REI
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Lien VuongBusiness Member
Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votesI dont have any feedback for turn key REI but lots of experience with 1031X and my suggestion for you is to make sure you have a good idea of the exchange you're going into or at least the category of homes or type you're aiming for. That will make it easier once your property is UAG to identify the next one. Another aspect that's important is to communicate to your relinquishing property buyer (Boston condo) that you're going be doing a 1031X and that they can offer you flexible closing time. The 45 days identification time sometimes presents a challenge and if you dont give yourself a little wiggle room you might end up buying something you dont necessarily want/like.
The rental season in Boston is definitely slower now so hang right or make some price adjustments, I'm sure the right tenant will come!
The Elle Group5153 Reviews
9 Replies
- Real Estate Broker · Greer, SC · Member since 2013 · 548 posts · 271 votes1y
Flip the thinking.......How much equity do you have? Would you spend that much for a shot at making 200 a month? If not, exchange.
- Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes1y
I've owned a bunch of condos, so I speak from experience. There are several factors that affected my decision, the first being the rising condo fees. Some of the condos here have extremely high condo fees. One place is $8,000 yearly condo fee. As I posted recently on BP, some of the units that I've owned included heat and hot water in the condo fee, which increased the condo fee such their fee was in the $380 monthly range. And in the same complex later built units had individual heat pumps and hot water heaters which the unit occupant pays. We had units that had heat included and units where heat was not included. In my experience owning units there for 20+ years, we were not able to get compensatory higher rents. Tenants were unwilling to pay the higher rent for units which included heat and hot water. They might pay a little more but not enough to cover the extra condo fee. A second consideration is that condos locally have become more adverse to rentals. So condos have gone so far to totally outlaw all rentals. Other complexes have put in a quota systyem of allowing only 10% rental and every one of the copmplexes instituting those rules already have at leats 10% rentals. In that case when a rental lease expires or a condo is sold, its rental exception is extinquished. A third consideration is that FHA has rules for limiting rentals in developments. If the number of rental exceeds the FHA standard then nobody can get a new FHA, owner occupant mortgage. At one condo development where I owned property, they did not exceed the rental limitation, but none the less were not certified for FHA financing. I spearheaded the movement to get the devlopment FHA approved so that owner occupant buyers could use FHA financing. I felt that it benifitted the community expanding the buyer pool and increased the value of all owner's property in that development both owner occupant and investor owners. The fourth consideration for condo owners is special assessments, which re have been hit for, parking lot paving, new roof, and new siding. These special assessment were thousands of dollars, and there was no sufficient reserves from the monthly fees to cover these large biggers, so the owner were required to cover the shortfalls out of pocket, what a great way to ruin your cash flow and ROI.
There are benifits to condos, including tennis courts, playground, swimming pools, club houses, and fitness facilities. And when we had those amenities we used those ammenities in our pitches to both renters and buyers. And we owned a bunch of rentals in condo developments with swimming pools which was a desirable appeal to many, becasue most condos did not have pools. The best pools are where somebody else does the maintenamce and has the liability.
- 1yTodd AndersonPro MemberReal Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes
Welcome to the BP community. @Jason Dillard that is a great point that many investors fall to look at when making this type of decision. What is the return on equity. If you have mony in the deal and it is no longer bringing a proper return it may be time to move that money into another property that will return more.
We have a great event coming up with a great BP partner. We are having a webinar on tuesday with PropertyLLama. They have a system that tracks this exact thing, so an investor can see exactly how the investment is performing.
let me know if you are interested in a link. Best of Luck
Quote from @Paul Garrido:
Hi BP community,
Having some challenges getting our 2bd 2ba condo rented in Boston. We’re still holding steady and hoping to get it rented in the next month or so. Will likely be cash flowing ~200-300 / month.
Talking with my partner, we started to talk think through worst case scenarios & options we’d have if it doesn’t get rented in several months.This brought us to the subject of 1031 exchange with a turnkey real estate programs. At what point would you consider turnkey and selling the Boston condo? Whats the experience been with 1031 exchanges with turnkey providers?
appreciate the help!Why is turnkey the only option? I'd pivot the condo to a SFR in the Boston-area, but really analyze if your vacancy is prompting you to transact, then are you really fit to invest?
REI is a long-term venture; if you cannot hold this will be a very difficult process.
- Real Estate Agent · Memphis · Member since 2021 · 41 posts · 25 votes1y
Hi Paul,
It's important to find a single-family home (SFH) turnkey provider with a proven track record of assisting investors like you in executing 1031 exchanges. You can achieve or even exceed your current cash flow in markets that are more landlord-friendly than Boston. I have helped hundreds of investors execute 1031 exchanges and build diversified portfolios across various excellent markets, all while using just one property management service. If you're interested in discussing this further, please feel free to message me.
- 1yJake AndronicoBusiness MemberRealtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
Why not lower rent? There's a 50 year record high supply of Class A multifamily inventory Nationwide that you're competing with.
Not sure what your monthly cost is, but every vacant month it costs a lot trying to make that up.
- 1yLien VuongBusiness MemberReal Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
I dont have any feedback for turn key REI but lots of experience with 1031X and my suggestion for you is to make sure you have a good idea of the exchange you're going into or at least the category of homes or type you're aiming for. That will make it easier once your property is UAG to identify the next one. Another aspect that's important is to communicate to your relinquishing property buyer (Boston condo) that you're going be doing a 1031X and that they can offer you flexible closing time. The 45 days identification time sometimes presents a challenge and if you dont give yourself a little wiggle room you might end up buying something you dont necessarily want/like.
The rental season in Boston is definitely slower now so hang right or make some price adjustments, I'm sure the right tenant will come!
The Elle Group5153 Reviews - 1yEthan Piani-HohmannBusiness MemberRealtor · Watertown, MA · Member since 2021 · 20 posts · 6 votes
Hi Paul,
I’m a Boston-based realtor who’s helped clients navigate 1031 exchanges into turnkey properties, and I’m shocked your 2bd/2ba condo in Southie hasn’t rented yet—prime location like that usually flies! What’s your current rental strategy? Are you listing on Zillow, working with a broker, or targeting specific tenant groups? I handle rentals for clients in South Boston and could potentially help get it leased.
On the 1031/turnkey idea, here’s my take from client experiences:
1. Partnerships:
- Equity Partners: For a 1031, team up with investors to fund a cash-flowing turnkey property. My clients have found partners at Boston REIA meetups to scale into bigger deals. I can connect you with them too.
- Turnkey Providers: Companies like REI Nation have helped my clients swap Boston condos for pre-rented Midwest properties yielding $700–1,000/month.
- 1031 Qualified Intermediary: My clients use IPX1031 , ensuring IRS compliance.
2. Funding Options:
- 1031 Exchange: Sell your condo to defer taxes, reinvesting into turnkeys. Clients have doubled cash flow by moving to markets.
- Private Investors: I’ve linked clients with lenders to boost capital for turnkey portfolios.
3. Leverage South Boston’s Resources:
- Market: Southie’s $3,000–3,500 rents for 2bd/2ba are strong, but your $200–300/month cash flow suggests high costs. Turnkeys elsewhere can hit 10% returns with less hassle.
- Support: Boston’s Office of Housing (617-635-0256) offers rental programs to fill vacancies while you plan.
- TBH - just hire a reputable realtor. You should be able to rent things within a few weeks.
Consider a 1031 if your condo stays vacant 2–3 months or cash flow doesn’t improve. My clients’ turnkey 1031s have been game-changers, but vet providers for tenant history. DM me to talk rental strategy or 1031 intros—I can help with either!
Best,
Ethan Piani-Hohmann
PH Realty Group (PHRG)544 Reviews
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