I have only done one 1031 exchange. We have 7 SFH in Ky leased to tenants and want to move our investments to Fl. The homes are free and clear. I just stumbled onto this site and want to start learning how to do the obvious, investment the money wisely in income producing rentals and avoid taxes. I can find several local investors who will likely buy my assets in Ky. Is it likely they will let the purchase escrow sit to give me more time to locate 1031 properties in Fl. Should I buy multifamily properties or single family homes. I am 57 and don't really want much risk or hassles and am willing to sacrifice greater returns. We also have owned a property in Orlando for 2 years that is appreciating well but the cash flow is not great.
@David Siders your scenario reminds me of a deal I put together for a gentleman in a similar situation as you. He spent half of his time in FL and the other half here in the bluegrass state. He no longer wanted rental properties and wanted something 2 with less risk and hassle. He owned a lot of MFH with a property manager in place. I worked out an owner financing deal with him to purchase a property and he receives a low-risk return as the "lender" on the property. He now travels around with his wife enjoying life and gets true "mailbox money". What I am getting at is that you should look into owner financing some of your homes. Since you have the network of local investors and the property to do so, it could be a good win-win for all. No, you will not avoid the uncle sam tax bill but you will also get a return (sometimes higher) than what you would during a 1031 exchange. That could be a wise play since you are saying cash flow is not great in your area of FL. Of course, talk to your CPA first about these options and make sure they fit with your plan. It just may be risker to move all your investments into a new state or area that may have a minimal return. I would look at what life you want to live going forward over avoiding a tax bill. If you are paying some taxes you have made money which isn't all that bad :). I would recommend sticking with SFHs over MFHs based on your goals since they are easier to manage. Especially if you plan on doing it yourself. I would not recommend managing them yourself either though.
Since you have done a 1031 exchange before I won't go into all the details of that but 1031s happen all the time between state. 1031s are on the federal level so the timeline is always the same no matter what the circumstances are (45 days to identify and 180 days too close). I do see where it could be more difficult with multiple SFHs unless they are all sold at once to the same investor and you are ready to close on your new investment property in FL quickly.
@David Siders With flexible buyers you’ve got a world of options available. Sell and consolidate to one larger asset that provides scale. Or multiply using your proceeds as down payments to get economies that way as well as the return boost from leverage. Or a hybrid approach.
One thought comes to mind immediately- if you’re thinking the Orlando property has peaked and you could get better cash flow elsewhere. Sell that and 1031 it also. Use it’s clising date to structure your other sales around. That way there will be plenty of calendar overlap to mix n match those exchanges as you’d like.
Thanks to everyone who has responded. I appreciate it very much and should have said so before now. At this point I am thinking we will hold our properties in Ky and go ahead and move to FL early next year. That way I can continue to network and learn the market before making any changes. Bigger Pockets is a lot of help ! James Wilcox , Brandon Reed, Dave Foster, Tom Gustafson
@David Siders good luck! Happy that BP was able to give you some insight.