All Forum Posts by: Alex Olson

While I do think a 1031 exchange is a wise decision, it would depend on your wealth track. Would buying and building and renting a short term stay be the best and fastest for your wealth building? Have your rented out an str before with amazing success? What if they change short term rental laws? Can you still make money? Why not buy a fourplex or 6 Plex with your funds?

@Patrick Lile Multifamily will allow you to scale faster. Just about any transaction takes about the same amount of time and effort so why not buy 4-20 units as your first transaction and learn from it. Then decide. I own both but started with a 5plex. The house is fine and does ok but it was a lot of work for one unit. 

@Dave Foster Can likely point you in the right direction! 1031 Exchange is a federal tax code so should be good there when you are exchanging. 

@Will V. What markets are you looking at investing in? I am in KC and happy to show you the ropes here. 

@Brenda Turner You can 1031 exchange in to any kind of real estate from any kind of real estate. Farmland to apartments. Single family home to office building. Apartment to apartment. If you say tiny home - is this a stationary investment real estate property? Meaning - does it have an address? If so, it would be considered real estate and if you are buying it as an investment property (renting it out for income) it will classify. If you are buying it to live in or live in part time, it is not eligible for 1031 exchanged, generally. 

I know you just mentioned KC and say it may be too far away. Are you familiar with David Greene and his book on out of state investing? He is from California and details how to go about it. It's a great book. 

FYI rates from local lenders here in KC are at 5.5%-6% with half point origination fee. 

@Patrick Thomas Dickinson I think there are some pretty good examples of individuals who have completed a 1031 exchange out of the Bay Area in to Kansas City and have achieved both great cash flow and appreciation as @Matt K. says. I am happy to show you some recent case studies here that have management and local lenders that make it less feel like out of state investing. 

@Steven Barr If you sell as a package (one transaction, on contract) you would need to make sure that your purchase price is equal to or greater than the package sale price. Also, you need to replace the same amount of debt you currently have on the properties in order to defer taxes. You can not sell properties for a lot and buy something for a little and defer capital gains taxes. It is a tool used to upgrade your wealth by buying something more than what your sold properties are worth. Also, in general, rule of thumb is to hold for a year or longer on the ones you want to sell and make sure you are renting them out. Otherwise, it may be considered a flip which is not applicable to a 1031 exchange. 

@Mike Douglas I am being a bit provocative here but cap rate doesn't' really matter when you are 1031 exchanging. No you don't want to lose money each month but there is a reason why you are exchanging. Usually to buy a better property(likely worse cap rate) or more units (leveraging all of your equity you have gained). The main thing you should be looking at is cash flow before and after 1031 exchange and time usage. If you want to spend more time doing something else, it is totally acceptable to have a lower cap rate. Most people I know are selling a smaller property and then exchanging in to a larger property (going from SFH to a 4-10 units). Hope that helps!