Can 2 properties be exchanged using 1031 to buy 1 bigger multifamily

[Sattir Bitti]

Hi All,

Is it possible to sell 2 properties and use 1031 exchange to buy a bigger multi-family? If possible, is this a good strategy? 

Thanks

Sattir

[Whitney Nash]

Hello @Sattir Bitti

Yes, you can sell more than one and/or buy more than one. Your scenario qualifies. Here are a couple things to keep in mind: You want to time everything so that you close on both properties that you are selling before the closing date of what you're buying so that the funds are there for purchase (and to avoid having to do a more complicated and more expensive reverse exchange.) Also, you want the replacement property to be worth equal to or greater than the cumulative value of both properties being sold (less allowable closing costs). The same goes for debt offset. You'll need to factor in the amount of debt on both properties that you're selling and get either a loan or bring cash to the table that is equal to or greater than the cumulative debt paid off for the new purchase. 

This can be a great strategy to diversify and grow your RE portfolio and overall wealth.