1031 exchange into Las Vegas or wait for a dip?

[Andrew Jackson]

I am moving from Eastern Utah to Las Vegas and have a duplex up for sale. Multiple offers have come in and like many of you I want to maximize my investment. I want to house hack into Vegas but I'm torn on 1031 exchanging and using a 203k loan into a 4plex that needs some work, once the work is complete refinance. Or 1031 exchanging into a 4plex that is basically turn key and finance with an FHA loan. Or save the profits of my sale, wait until the market dips, and invest in Vegas at a more ideal time? Or should I wait for the market to dip in Vegas before I sell my home in Utah?

Thoughts?

I understand most 4 units are in poor locations, and need work.

Can I finance a portfolio with 4 SF homes in it under with FHA?

Thanks for your input, I'll be doing some reading on FHA rules and the portfolio investment. Haven't found anything yet.

[Dave Foster]

@Andrew Jackson, Both @Caleb Heimsoth and @Justin Hammond bring up good points.  But there are a couple of ways this could work for you.

1. In order to qualify for 1031 treatment you are selling investment real estate and buy ing investment real estate.  And in order to defer all tax you must purchase at least as much as you sell.  But something like a duplex or 4 plex can be what we call "split use".  You live in 25% (one unit) and rent out 75% (3 units).  As long as the investment portion is enough to cover your 1031 that is fine.  If you sell your UT property for $300K and purchase a 4 plex for $400K you could live in one unit still purchase the plex with your 1031 exchange.  Because you are purchasing at least as much as you sell.

2. The conversion that @Jaiden Olsen refers to is all about your intent.  If you intend to move into your replacement property then you're not buying an investment property.  You're buying your primary residence - no 1031 allowed.  But if you buy an investment property and then later change your mind and move into it then 1031 is fine.  Because you are selling investment and buying investment and later changing intent.  How long is a floating target.  Most folks feel good at more than a year.  There is a safe harbor at two years with some other restrictions.  And I'm sure there are folks who have gotten displaced out of where they live and converted sooner.  But it is very doable.