1031 time table is daunting

[Matt Brown]

Hello - I’ve been considering selling my rental and 1031’ing gains into a new property/properties.  I know I need to start this process because my current cash flow is low and there is significant equity that could be used to produce more cash flow in a different property.  However, I’m scared!!  I’m scared the time constraints on a 1031 will cause me to buy a less than desirable property.  Has anyone else felt with this fear when executing a 1031?  If so, how did you overcome it?  Thank you very much for any input.

Matt

[Dave Foster]

@Matt Brown, My clients go through this all the time.  I think the best emotional support for you will come from a change of thinking.  Instead of focusing on the sale - Focus on the purchase.  the difficult part is not selling your old property.  the difficult part is buying the new property.  So go find your new property first and get it under contract.  You can go into contract on your new property before your old property closes.  You just can close on your new property until your old property closes.

It may take extra earnest money or removal of certain contingencies.  But there are sellers everyday still working with buyers reasonably.  

And think of the benefit to you in this scenario - You have your 1031 replacement ready to go.  You have your purchase price locked up.  And you are still getting the appreciation on your old property while it's not on the market.

One other twist to this scenario that brings up is the idea of selling your property with an extended close.  there are a lot of investors who would love to lock their purchase 2-3 months before they have to close.  They're looking at closing with a bunch of free equity in their pockets.  And they've accommodated your 1031 nicely.