1031 Exchange or hold profits until market corrects

[Tupu Folau]

Hi All, I'm new to BiggerPockets and have 2 rentals. I'm selling one of those rentals this month (in the closing process) and should profit around $100K. Here are some options I'm considering and would love and appreciate some input/feedback/ideas 

1. Take a capital gains tax hit of $15K (15% of my gains) and wait to re-invest in a rental when the market corrects. I understand no one knows when or if that'll happen -- but from my research, I feel like we are at a bubble and hoping prices come down in a 1-3 years. 

2.  1031 exchange to put the entire $100K into a new rental. Where I live, Utah County, UT I can't find homes or multi-plexs that will cash flow since prices are so high. So I'm looking out of state in Ohio, Tennesse, Illinois, and Missouri and have found properties that will cash flow. I've started using Roofstock (found someone else mentioned it on Biggerpockets) to help filter through properties. If anyone has used Roofstock -- would love to hear about your experience. I'm nervous to invest in these cash flowing properties I've found in these other states because they aren't in the greatest neighborhoods, don't know the area well, and called a few management companies but didn't like any of them. 

3. 1031 exchange into a temporary rental that I'll move into in a 1-2 years as my primary residence. I've read conflicting things on this but wondering if anyone has ever done a 1031 exchange into rental that became their primary residence after a given time. The idea here would be to buy a home that I would like to live in and rent it until I'm legally allowed to convert it into my primary residence.  The reason for this is that we want a larger home -- we just had baby #4 and want a bigger living space. 

Appreciate any advice - happy and excited to be a part of the bigger pocket community. 

[Bill B.]

Don’t forget to add $5-$20k for state income tax and another $5-10k or more if you’ve held for quite a while for depreciation recapture. 

There is ZERO chance you’re going to sell, realize 10% in closing costs and 20+% in taxes and get back in at a lower price point. Are you really hoping for over a 30% price drop? If you sell you do a 1031 or remove yourself from investing in real estate. 

Luckily there is also ZERO problem with doing a 1031 into a new rental that no longer “works for you as a rental” so you make it your new primary. Just for future info. You will not qualify for tax free primary home sale in the future no matter how long you live there because it was a rental first. (It will be prorated.)