Single or Multi family through 1031 exchange?!

[James Kapenas]

Hello! I have a performing single family rental in San Diego in a great neighborhood making nice positive cash flow every month with a low interest rate. It has roughly 500K equity that I’m considering doing a 1031 exchange into a 4 plex in the range of +/- 1.2 million. Fairly certain of the course to take but interested in any sort of intel that I might be able to gather from here!

[Kenneth Donaghy]

@James Kapenas I would first ask you this. Did you live in the property 2 of the last 5 years? And are you married? If so you may be eligible capture that 500k tax free without having to do a 1031. If you lived n the property 2 of the last 5 years, you may be eligible of 250k tax free. 

It's important to know you timelines and be working with a team that understand your goals. I have had people reach out to me on Biggerpockets with 10 days left to identify their properties, of course we have always made it work and put my clients into a better investment position, but the pressure is on! So I always thinks it best to know as much as possible about your replacement property before entering the first leg of the exchange.  

I know some top notch real estate investors that rather pay the tax that get into a bad investment because of time restraints, they feel a bad 1031 exchange can cost them more than tax bill. Just something to keep in mind.