Question: how to 1031 exchange duplexes in a competitive market.

[Bart J. Olson]

I have 2 duplexes in Everett, WA.  One duplex cash flows $1000 and the other about $700.  I bought both as owner occupied.  Im thinking I could probably sell both duplexes around $1 mi and net about $250-$300k to reinvest.

I got married had a child and moved South to Tacoma, WA to be closer to family where I purchased a home with a mortgage of $3250. 

I have total debt of about $85K-$100k and am wondering if selling one duplex to satisfy that debt and rolling the other duplex into a similar property is the best thing to do?  If I dont sell anything, my monthly expenses leave me a little too tight at the end of the month.

My main goal is to increase my cash flow with the money that I have to reinvest.  Reinvesting in MF (4 plex or more) would be ideal, but I run the risk of losing out to the competition that seems to be able to buy at the drop of a hat.  Then that leaves me with the risk of getting hit with the 1031 tax.

Are there other ideas on how to reinvest the money from a 1031 tax exchange to achieve that goal?  Investing out of state/other ventures?

Thank You!

[Max T.]

If you lived in one of the duplexes recently you can sell it without paying cap gains tax (not using 1031).

Talk to your tax pro.

The first one you bought would probably make a good candidate for 1031 or hold.