How To Do a 1031 Exchange For An Existing Syndication

[Ken Martin]

Hi BP community, I am about to kick off a syndication/raise for a great multifamily property in the midwest, and a few potential investors have expressed concern around investing given they would want to be able to INDIVIDUALLY 1031 their profits into a new property in 5yrs when we exit. I've done a lot of reading on different strategies, and am trying to understand which is the most applicable. It sounds like structuring the deal as a TIC upfront is very difficult from a lending standpoint? It also sounds like a Drop and Swap can get hairy if done at the end of the hold period, especially with a promote structure. Is there a way to just pay out the investors that don't want to 1031 at the end of the hold period, and execute the exchange with the remaining group? Is there a tax consequence for those investors you buy out? Any clarity is very much appreciated.