Advice Needed: Selling Single Family Occupied by Tenants

[Glenn Clapp]

I have put in offers on two properties to 1031 exchange with the sale of my occupied single-family property. I have a sale clause in the lease and have asked the tenants to vacate before I list the property. The tenants expressed an interest in buying the property. They have asked if I would be interested in seller financing.

I am open to most any creative ideas that gets everyone what they want. For me, I want the cash out for the down payments on other properties plus rehab and I want a 1031 exchange to defer capital gains.

I would like to hear some recommendations form those far more experienced than I on what options would be best to consider and structure.

If I do seller financing, I would expect a down payment of some realistic amount, but if I do that, can I also refinance to pull out the cash I need for a down payment? What would that mean for a 1031?

If i do a lease option and refinance, I expect a 1031 would be deferred until I sell the property if the tenants exercise the option in say, 2-3 years, and that may be OK, but I may not be desiring to do a new purchase at that specific time and would then risk having to pay capital gains.

What other options might I have? What might work best for both? Right now, the single family rental is 100% paid off with no debt of any kind. 

Thanks,

Glenn

[Account Closed]

Why do they need to move out before you list it?  You might find a buyer (investor) that wishes to have them stay - and they can perhaps sell the property to the tenants.  Or your tenants might decide to get their own financing and make you an offer.  More importantly, you can move on to the two properties that you have put in offers on and accomplish your goals with that equity you have tied up.   

To do a 1031 exchange, the lining up of the timing can be tricky.  The more simplified it can be the better.  You might reach out to a couple of QIs and decide who you want to work with so you at least have your 1031 lined up.  A good one can go over different senarios for you and help you brainstorm.