How to best leverage my cash from my apartment.

[Patrik Kisucky]

Hey, Bigger Pockets community. Even though I rented two bedroom apartment for the past 6 years, I'd say I'm pretty new to the RE investing, since I used to live in that apartment before, and when we purchased a home we decided to rent it. Since we have good amount of cash sitting in that apartment, I'm ready to sell it, and leverage all the money by doing 1031 exchange IF I'll find a good deal in this market. Now I know, no one has a magic ball, on what the future will bring, but would love to hear your opinion on my options (I should also say, that I live in MA):

1. - If I'll do 1031 and split the cash from the apartment for down payments, I could afford two multifamily homes.
2. - Pay the capital gains tax, keep what's left and do BRRRR to eventually end up with more houses than just two. Though in this market when the prices are expected to go lower vs higher, the BRRRR may be tougher to do I think.

Pls let me know what you think, TY!

[Dave Foster]

@Patrik Kisucky A variation of the two options might suit you just fine.  Certainly no reason to give up the tax dollars now if you're going to reinvest anyway.

But, Combine the 1031 with BRRRR. Do your 1031 and buy two replacement properties. But allocate your proceeds so you buy a rehab project for cash or as little downpayment as possible. Then round out your reinvestment requirements by purchasing a second property with maximum financing. Let the second property percolate. And rehab the cheaper property. Then cash out refi it. Since you purchased it with less leverage you'll get more cash back from your refi to purchase your next property.

Everything's tax deferred. You get two properties initially. You get to BRRRR and get access to your equity more quickly. The key is that you can allocate the proceeds from your sale any way you want in your purchases.