Selling SFHs to buy an apartment building

[Steve S.]

I have 6 SFH which are all rentals in Florida. I am moving to Texas in two years and would like to purchase a small apartment building 20-30 Units. What is the best way to sell all properties and pay the least amount of tax? If its even possible to 1031 into commercial, from a SFH rental, I wouldn't be able to sell all and find an apartment within allotted time (90 days I believe). Also is it possible to cash out refinance all homes and wrap them all into one mortgage?? Anyone know a lender in Florida that I could talk to about that?

[Dave Foster]

@Steve S., Lots of moving parts to your scenario.  Here's some initial pieces to the puzzle.

1. Any kind of investment real estate can be sold and exchanged for any other type if investment real estate. So a move from SFH to apt. is fine.

2. You actually have 180 days from the date of your sale to complete your purchase so here's some possible scenarios.

     a. sell them all as one portfolio - so one exchange and into your apt.

     b. Sell them one by one but all within a 180 day window so you can close on the purchase in the allotted times.

     c. Sell or purchase with contingencies that require the buyer/seller to cooperate with your search for a suitable replacement or to wait for your sales before scheduling closing.

    d. Use a reverse exchange where the 1031 intermediary purchases the new property and holds it for you in a special entity called the Exchange accommodating title holder.  This is held until you close the sale of your old properties (but this too has a 180 day window).

You've got some time to plan so there are several ways to make this work.