Dilemma
Hi:
We have a dilemma/opportunity that has presented itself. We would like to get your advice on.
We have a rental home w/ substantual equity and our tenant has just given us notice that he will be moving out the end of June. We would like to consider selling and doing a 1031 exchange, but here is the deal:
1-We have looked a numerous multi-family properties (10 units and under) on the market and none of them cash flow w/ less than 25%down.
2-In talking w/ our broker, evidently a lot of CA investors have come to Idaho investing, driving up the property values, while the rents remain low.
3-Should we be looking into some other markets? Are there companies that put investors together as tenants in common to pool funding investments?
What do you think the best strategy is w/ the position we are in...we have the $, but don't want to make a poor decision.
We look forward to your knowledge and perspective.
Its true the investment market is tough right now due to lack of product. But that is mainly in the single family arena. The commercial side is still pretty good, and there are deals to be had. You may have to broaden your search to include more rural areas, or different ways to find the properties.
I would suggest getting with smaller realtors, foreclosure markets, deed sales, auction houses, expired MLS, note buying of non performing notes, or even new construction and development oppurtunities. If you are just out of ideas, PM meand I can suggest some more.
As far as companies that put investors together, yes they are there, but only use that if you would like to make a set amount every year on the cash that you can put aside with them.
Good Luck,
Kyle
If you can delay the effective start date of the 1031 exchange that makes the most sense.
This means not selling until you are ready.
You want to identify one or more alternatives to buy and then you can start the clock ticking.
Alternative by choice or by mistake is you do not do a 1031 and you pay the tax. The tax rates are not as high as they once were so it might be a good time to convert the pre-tax profits into post tax funds.
If you are going to look further a field then you need to decide how you will deal with it.
I have heard of companies that offer deals for 1031 exchanges where they will match other investor up. They are selling factional ownerships through a TC as you noted. You need to watch the fees. My father in law is a commercial lender and such documents pass his desk when he is organizing the loan packages. I do not remember the names but your local commercial lender will likely know.
John
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