Trying to go to the next level

8 Replies

I am liquidating a couple of properties in Pittsburgh PA and will be utilizing a 1031 exchange. I currently live in MO. I believe that Plano TX although is a high priced market, might be an area that I could build a multifamily complex. I am not starting with a lot of money ($100,000 - which could be leveraged more), but I am thinking I would like to find a couple of like minded individuals (create a mastermind type group) who would like to explore somehow combining our money together to build a decent size apartment community (20~30 units, 3/2) in the Plano Texas area. I am just starting to explore this area, but find it very intriguing based on information I have read. I am looking to create appreciating equity as well as cash flow. Please let me know your thoughts, how this idea can be achieved and who might be interested in this venture. 

@Warrick Wadman building a complex as your replacement is a pretty big first step and would require a reverse construction exchange which is a relatively expensive process.  But if you're looking for partners there's a couple of other options for your 1031.

1. Use your proceeds to buy an existing larger complex as a Tenant In Common with your partners. If you sell for 100K then you would need to buy for 100K to completely defer all tax on your exchange. But you could purchase 1/3rd of a 300K complex with your partners purchasing the other 2/3rds as TIC with you. That satisfies the exchange and positions you with partners you can move forward with in a larger asset.

2. If you really want to build something then either delay your 1031 or do a 1031 into an intermediate asset. Identify your partners and create an operating structure. Then have that entity build a complex. As long as that entity either doesn't include you at all or is not a related party to you directly you can still then sell your intermediate asset and 1031 again into a TIC interest in that new complex when built.

Dave, you seem to have provided a lot of great advice on this website so thank you for that as I just became a member. I might be thinking about this wrong. Lets say I want to leverage pretty high. I find 10 people with 100,000 each including myself for a total of 1M. Would it be possible to approach a bank with the 1M, get approved for an additional 4M and buy a 5M piece of property? 

I'm tired of SFH. Let's chat

Sure, what do you want to chat about? Do you want to do this offline? Do you have some thoughts on the location or type of investment? 

Plano is pretty much built out. Try Frisco or parts north.

Hi @Warrick Wadman - where are your  properties? My husband and I live/invest here, maybe we could take some off your hands? 

@Warrick Wadman , yes you can.  There are some logistical things that will need to be dealt with from the 1031 and lending side but in general there are several ways you could involve partners along with your 1031 exchange from a 100K property with leverage into a 5 mil property.  The devils in the details, the entity structure, and the underwriting.

Lacee: All four of my properties are in Wilkinsburg. One is under contract and I just put another up for sale. The addresses are:

513 Hill (up for sale)-there is a showing this Monday (12th at 6:00 pm)(2 unit: 4/1)

909 Franklin - considering putting on the market (3 unit, 2/1)

1510 Wood - considering putting on the market (sf, 4/1)

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