Syndicated Residential Liquidation Deal Structure

[Raphael Thomas]

Hello - I'm a real estate investor in Minnesota, and am pulling together a deal to purchase 8 properties that will be syndicated to multiple investors. The strategy is liquidation, but to avoid short-term capital gains taxes I'd like to 1031 the properties that are sold during the first year then distribute profits for the properties that sell after a year. This can get complicated given the 1031, which might result in different ownership % of properties purchased partially with liquidated property proceeds. I need some help thinking through the best deal structure for this, and potential non-obvious issues. 

Has anyone executed a syndicated 1031 liquidation strategy or something similar? If so, I'd love to connect.

Thanks,
Raph

[Tim Swierczek]

@Raphael Thomas I attempted a purchase into a syndication with 1031 funds and it was near impossible.  The legal fees alone would have exceeded $35,000 additional dollars above and beyond the SEC attorney for the syndication.  We had a team including an SEC attorney, a 1031 intermediary, a Tax Attorney that was recommended by the intermediary and experienced in these matters, and a CPA and the meetings and timelines made it almost impossible to complete the transaction.  We would have had to delay a couple of months to get it all done.  This was going in using 1031 funds, it is easier if you 1031 out but you must have agreement from your investors going in that is what you would like to do, and they still need to be on board when it's time to sell. 

The only investor I'm sure that has pulled this off in mass is @Neal Bawa from Grocapitus Investments