Success in selling off market listing and doing a 1031?

Question

*New member of BP here*

Hi!

Currently I have two properties that both generate cash flow and have appreciation upside down the road but I'm seeking to invest elsewhere now.

MY QUESTION: Has anyone here or know someone who has had success selling off market listings and executing a 1031?

If so, what was your process?
Who are the best people to connect with on BP for this?
Where are the best places you have posted your off-market listings? (which forums are focused on this on BP?)

Which 1031 service did you use? Are there any 1031 services that help with this type of use case?

Cheers,

Patricia

Timothy Smith · Answer

@Patricia Yang yes, I've done this twice. Listed my first property on Zillow and put a yard sign out front, sold it for 25% MORE than my agent suggested I list it at. 1031'd it into two more properties, one of which I sold off market 4 months after closing on it. Mutual acquaintance put me in touch with the buyer, as they were looking for what I had. No agents involved.

Best advice, don't take 1031 advice from anything who isn't an actual 1031 intermediary. Too many people (myself included) think they understand it and don't. Also, make sure your CPA is comfortable with the topic as well. I used Russ Gullo based out of Buffalo, NY as an intermediary -- spoke with a few others, but Russ knows his case law and has proven himself invaluable when we got into some non-standard situations.

Lien Vuong · Answer

@Dave Foster is going to be your guru for 1031 Exchange help. Selling on or off market is similar process and the Feds have given 1031 Exchangers an extension for the process because of lack of inventory and inability to get inside properties.

Best of luck!

Timothy Smith · Answer

@Patricia Yang Buffalo, NY. It was a duplex that I rehabbed myself in a great area, rented it, and that was going to be our only rental property. Quickly realized we had loads of equity and could turn it into more properties, so I showed it with tenants in place and an owner-occupied bought it then gave one set of tenants notice.

Dave Foster · Answer

Thanks for the shout out @Lien Vuong.  There's a unique set of opportunities and potential hindrances for you when selling off Market @Patricia Yang.  But your desire to do a 1031 really doesn't impact the situation negatively.  The 1031 starts with the closing of your sale.  So it doesn't matter if you FSBO or sell to a large national like Redfin, or retain a real estate agent.  That part of the process will be identical.  So eliminate the 1031 from that part of the consideration and execute your sale in the manner that will be most advantageous for you.

There may be an advantage for you when selling off market because you're dealing with a pool of possibly more flexible buyers.  This can aid your 1031 because you can negotiate your sale contract with them with a closing that could be delayed until you find your perfect replacement property for the 1031.

Lien does make another good point.  And that is, if you have buyers on the line right now and can close your sales before May 31 you'll get an extended period for your shopping and identification period.  Normally it is 45 calendar days from the date of the closing of your sale.  The IRS has now extended all 1031 deadlines that would have occurred between April 1 and July 14 to July 15.  So if you close your sale in early May you'll get a couple extra weeks for your identification process.  And two weeks can be a lot when it comes to finding the perfect replacement.

Aaron K. · Answer

@Patricia Yang is there a specific reason you wish to sell off market?  You'll generally get more on market especially if your properties are SFRs, now if you want to sell them as a package that may change the calculus.  If you price them well you shouldn't have a problem the bigger pockets marketplace is where I'd start.  Also when posting mention where the properties are so you set off the keyword alerts for investors in that area.

Alex Olson · Answer

Where are your properties located? I would find a good agent that has a great set of buyers. This way you can keep it off market and sell it to his or her buyers. Then help you 1031 into another property . They should also be able to help you find a 1031 expert in your area. If you are considering KC for any of this let me know. I am happy to provide my expertise. Hope this helps.