1031 exchange or buy fixer upper

[Khandbari Rai]

I am selling my str but i want to leverage the gains without getting tax hit. Which one would be more beneficial, to do 1031 exchange or buy fixer upper or rehab house?

Thanks for your advice in advance.

[Dave Foster]

@Khandbari Rai, If you want to avoid tax you're going to do a 1031.  But why not do a diversification exchange - sell one higher priced asset and use the proceeds to purchase two fixer uppers.  You can allocate your proceeds anyway you want in a 1031.  So maybe you could even purchase one property for cash.  And purchase the second with maximum leverage.  Then you can do a cash out refi on the debt free property.  And use the proceeds to improve both properties.