Small Group RE Investing Preserving 1031 Like Exchange

2 Replies

I'm looking for more information on how to invest in real estate with a small group of individuals holding long term rentals preserving the ability to like exchange when investors want to cash out.

1) Is there a way I can structure an investment entity that preserves the ability to 1031 like exchange if investors want to cash out? My understanding this is do-able with Tenants in Common(TIC), but makes it almost impossible to get loan financing. Is there a way to do this with syndication?

2) Is there a way I can 1031 exchange proceeds of properties owned by me into an investment entity with multiple investors? Or exchange without selling to the entity?

@Michael Alford , Folks will set up an entity like an LLC or LP or GP and issue membership interest to investors. That LLC has the ability to 1031 exchange as it is the owner of the properties. Any time an investor wants to cash out the entity can buy back the membership interest and redistribute.

This is an easy structure to create but the marketing and management of it must be done carefully to avoid securities issues and protect members. Note also that in a structure like the individuals will not be able to ever do their own exchanges on their individual interests. Only the LLC/LP will on properties it owns as a whole.

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