1031Exchange Experiences and Strategies

[Liam Somers]

Purchased our first property (a duplex in IN) about 3 years ago, and we're now looking to sell to lock in the appreciation that we've had over that time. My thoughts were always to do a 1031 exchange to a larger multifamily (3-6 units) and take on a larger mortgage. This option appeals because it would lead to greater cashflow and more units would help mitigate vacancy expenses.

However, an alternative would be to take the money and invest in another duplex that's approximately the same price - this would mean that we would have a smaller mortgage payment (or none at all) and much more cash flow than we do currently. Additionally, there's more inventory for duplexes than slightly larger multi families in IN.

What are people's thoughts on this? When you did your first 1031 exchange, what type of property did you switch to and why? I could obviously run the numbers on any potential properties myself, but I'm interested to know about other people's experiences and the thought process behind their decisions.