Using a lease option to accommodate a sellers 1031 exchange?

[Pat Jackson]

This question is regarding a trailer park, however I think it is equally applicable to pretty much any 1031 exchange.  In this situation a park owner owns a park outright (prime for seller financing), and he really wants to 1031 exchange into a farm.  He doesn't want to exchange right now, and my partner and I need a few years to stabilize everything (and document expenses) so we can get bank financing.  This is a nice park, the owner owns and rents the majority of the homes, however it's a typical mom and pop park.  Poor records, owner does all his own work and maintenance, and it's hard to get a true handle on expenses.

From my understanding the 45 day period to identify properties to purchase on a 1031 exchange starts the day the property goes under contract.  Obviously we need more than 45 days (or even 6 months) to stabilize and document trailer park expenses.  Someone recently recommended doing a lease to purchase option.  Does anyone have any experience doing this?  Any other thoughts on how we can "take over" a park, but allow for a balloon payment 3-5 years out and allow the seller to 1031 exchange this final buyout?