1031 Looking to Invest in STR in New Hampshire

[Heidi Wallingford]

Times ticking on our 1031...our plan was (is) to buy a SFR and STR, but finding it challenging with new town ordinances and HOA's wanting to do away with STR's. We live in MA and would like to be within about 1.5 hrs from home. Our price point is $350K max. We're thinking NH for year round rentability, but maybe we should look elsewhere? We could use some advice, thx!

[Ricky A.]

Currently doing a 1031 to exchange an LTR for a STR in NC. Fortunately, I got the replacement under contract before the sale of the relinquished closed...I know I would be stressing too if my 45-day clock was ticking without something identified.

Can't help with the direct question, but a couple of things to consider:

1.  Consider the actual amount of capital gains taxes you're looking to save (well: defer).  If the gain on the relinquished property was modest, like say 100K, the most tax you're looking at deferring would be $20K.  Trying to identify something too fast and buying the wrong property could quickly wipe out a savings like that.

2.  Perhaps the gain was larger and you're looking to acquire the new property with little or no leverage.  If this is the case, you may consider getting a more expensive property and using a bit of debt.  Of course, this comes down to your risk tolerance, but I believe the right property with reasonable leverage can be less risky than the wrong property with no leverage (from a wealth perspective).