Inspiration and/or Advice

[Scott Davidson]

Maybe this isn't the correct category to put this.  As I type this out, maybe I'm more so looking for a mentor that could give me some solid advise.  I've made multiple purchases (2 separate primary houses and 2 more vacant land) but I'm currently selling my first property.

I'm currently selling a property in Washington and just went under contract.  I've reached out to a 1031 exchange facilitator and looking to reinvest rather than pay about $65K in capital gains.

My main issue is that my wife and I have put in several offers over the last year and a half in the Phoenix market (which is insane!) with no success.  I know that the biggest obstacle so far has been not being there in person as we're trying to invest from Alaska.  My question is...should I be changing my strategy and look in a different market such as local or continue as I have been?  Or should I look at this as if I'm successful and get a place, then great...if not, then just pay the taxes and be happy with my accomplishment rather than being upset that I had to hand over so much money.

[Dave Foster]

@Scott Davidson, You're not too late.  But you're in a real situation in a real market.  And you have to take what the market gives you.  Here's a blog we just wrote for BP on making a 1031 work in a sellers market - https://www.biggerpockets.com/...

It can be done.  But you have to be focused and realistic.  I went into the Sunrise FL Market in Late November looking for a house.  For two months prior to that and the 45 days of my search there were no houses in that inventory whose listing was more than two days old.  I wasn't a cash buyer, I wasn't prepared to offer the moon.  And I don't buy without finance and inspection contingencies.  At the end of January we closed on a great property.  We offered a small amount more than list and guaranteed $5K above appraisal if it didn't make appraisal.  We received our over offer back in concessions after inspection.  Those are some of the things other than what we wrote in the article that we did to make it happen.  And we're not the brightest candle on the cake.  Even in this market over 92% of our clients finish their 1031s with properties they like.  So it will be worth some effort on your part.

@Randall Alan, Totally understand your sentiment.  But for me it's using the tax dollars to compound as long as I can that works.  Exactly like my 401K.  And if I ever sell without a 1031 I'll pay all the back taxes as well.  But I gotta challenge what you said here, "...eventually sell, you may owe all your profits to taxes.".  No ,you will never pay all your profits to taxes.  No one ever went broke paying tax on profit.  You may have to use all of your net proceeds to pay the taxes if you don't sell right.  But that is only because you've refinanced at some or many times in the past.  And those refinances are nothing more than pulling out profit without a sale.  But for me I'll use the tax for my benefit as long as I can before I pay it.