1031 Exchange and Commercial Rent to Own Property

[Sean Maginess]

We sold a property using the 1031 process and were approached by a business about purchasing a piece of commercial property for them with the intent to create a rent to own agreement.  

Our previous experience has been to buy and rent properties long term, so I'm not sure the best way to go about analyzing the deal to make sure it is profitable.  

The business is currently occupying the property would continue to be responsible for all maintenance, taxes, utilities, etc.  It seems like the structure of the deal would see us acting more as a bank than anything else.  

Thanks for any insight!

[Natalie Kolodij]

Hmmm well the intent of a 1031 has to be into another investment property...

I'd worry this may fall more into a gray area if its being entered into, already technically lined up to be sold but I could be wrong. 

What about a NNN option? Where they long term rent it from you and cover utilities and such?

Buying it just for them to save up to own it seems like you'll get the short end. 

Maybe @Dave Foster will comment on any 1031 issues wiht it.