1031 Exchange - Phoenix or Kansas (KS/MO)

[Maria Pereyra]

Hello! 

I am new to BPs, wished I would have signed up earlier! I started my real estate journey in 2005 with the first property being in Austin (more below).  I have other properties in AZ, which I do not directly manage (I have a full-time job with a demanding schedule), 

At any rate, here I am and am seeking perspective around the following:

- Selling a SFH in Austin, which has a great location, amazing school district, but selling due to very high property taxes ($12K for 2021; $9K for 2022). Selling it for $450K.

- Exchanging it for another property to limit the tax impact - my criteria thus far has been mid-class neighborhood with decent school ratings

- Phoenix could be an option (I live here) but the affordable/newer properties are in the suburbs where schools ratings are poor. Examples. could be Buckeye, Surprise, Queen Creek. The property taxes are reasonable and so the insurance (let's say $3000 for both or maybe a bit less)

- Kansas (Lee Summit [MO] or Overland Park [KS]) are contenders as well where buying property is more affordable BUT property taxes and insurance, combined are $6K'ish, with better ranking schools. 

My strategy to date has been buying SFHs with decent school ratings. I think from a reseller standpoint it is better. Now, for this exchange, based on property costs that fall within my criteria, the CoC is not very high for either market - about 5-6%, so not great but better than paying the hefty tax for capital gains ($100K'ish or higher once depreciation is added). What is your perspective on what would be the benefits or drawbacks for either location. I think that potentially there could be other markets, but at the moment I am not considering them as I am not familiar with them.

Thank you so much for your input!

Maria