Feedback Requested for Reinvesting 1031 Exchange Funds

5 Replies

Hello BP community,

I've been on BP for about one month and I'm addicted to it. I'm learning so much reading the forums and listening to the podcasts.

I'm new to RE investing as far as investments for cash flow but I've been buying condos and homes for my primary residence since 2002 in San Francisco. The last house my husband and I bought turned into a rental and we plan to sell it next month. We're selling because it's a good time to sell and we think we can get better returns elsewhere. (Also, we recently moved to the Seattle area.) We plan on doing a 1031 exchange and anticipate the reinvestment amount to be about $1.5 million.

I would appreciate any feedback on our plans to reinvest the 1031 exchange funds. (I would say our risk tolerance is moderate to slightly aggressive, and our long-term goal is to have passive income.) We would like to purchase a small apt building locally (Tacoma) for about $1.2mm, and invest the rest in single family homes in the Kansas City area for steady cash flow.  I'm concerned that we would be spending the bulk of the funds in an area that I think is overpriced or difficult to find a good deal in a tight timeframe. (We'll need to identify the new property within 45 days of the sale of our house.) So, our other plan is to spend $1.2mm on a fixer buy and hold single family in San Francisco since we know the market better there and we believe the house would appreciate a lot faster in SF. 

So, what would you do? 

Well, first congratulations!  Sounds like you are in a great place in your RE investment career.  It also looks as though you already understand the rules and timelines of a 1031 Exchange.  If you do decide to go ahead with the 1031 Exchange, or even just have questions about the process, please do not hesitate to contact me via PM  or calling my office.  

Good luck with finding investment replacement property for your Exchange.

Thanks, Bill! I am working with a 1031 company right now, but I will reach out to you if for some reason the other company doesn't work out. Thanks again.

It sounds like you just need to talk it out cause it seems your doing freaking great with over a mil to invest. So, what is the trouble with investing in Tacoma or even closer to Seattle? I would imagine within a week you can see every apt for sale in Tacoma. In Pierce county you have 12 options currently for large multifams on the MLS. What about commercial?Would that not be close enough for a 1031 exchange? Not up to par on my 1031. I would also say what about using that money as a downpayemtn on multiple apts? Is that allowed?

Also could you put in offers now contingent on the sale of whatever property you will be selling and then you will be set to rock and roll?

Have you considered looking at central oregon?  it's not too far from where you are at in WA, and it's also not a big jump from the bay area.  Lots of investors from the bay area here.  Give me a call if you want to chat about it.  The rental market is really tight here.  

If you're absolutely serious about 1031 exchanging and are looking to buy in the Tacoma/Seattle area I know someone that can help you find what you're looking for and get it under contract. He's not cheap but worth it if you've only got a limited amount of time to take something down. PM me if you want an intro. He's a local Seattle guy.

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