Selling my my rental in Oregon, 1031 exchange one possibly two SFH in North Carolina

[Austen Carroll]

Hey BP fam, 

My PM notified us our tenant in our SFH rental in Salem, OR is purchasing their own home and will be moving out the end of May or June. Selling this unit has been a discussion for a couple years now and this vacancy might be the right time to do it. Deferring capital gains tax via the 1031 exchange into another property seems the most beneficial and efficient. I know little about 1031. I know we'll need to use an official intermediary, 45 days to identify like/greater properties, and 180 days to close.

question #1: Is anyone savvy and familiar with 1031 willing to chat? Wanting to learn the basics and also to gather some previous experience and wisdom, things you wish you did or didn't do. mistakes to avoid etc. Or can anyone list some good resources online where I can read up on it all?

I'll write some context on the house we're wanting to sell and why.

Bought 760 E st NE in Salem Oregon back in 2016 for $168,000. With a quick paint job, minor cosmetics, and landscaping the house rented quickly. Since 2016 we've had it rented 99.9% of the time. It's been a golden goose laying eggs. Rent has been almost double my PMI so it's cash flowed extremely well over the years with no large maintenance costs. With the market and demand property value has increased a lot. Zillow says $317K I know zillow isn't the most accurate, nonetheless, it's value has increased so much. If we sold for 300K-105K (mortgage balance)= 195k. divided by my monthly net profits about $650. It would take me 25 more years to see the same return. Additionally, I don't live in Oregon anymore and frankly want to just exit that market area because I can self manage rather than pay a PM. and looking to benefit from the growth here in NC.

Targeting the Raleigh expansion. We're seeing massive property value growth in Raleigh and bordering towns south down highway 1.

Winder Station is a new large development selling new builds/lots starting in the mid 200K range in Vass NC. talking with agents in the area, people from Raleigh are willing to commute, as well as military families stationed at Ft Bragg. So I'm starting to considering purchasing one of these "build" contracts. construction is projected to finish in November 2023. 

question #2: Does anybody have experience investing in these new build developments before the houses are even finished? is this model a strategy used by large developers to minimize their risk levels? If the developers don't "pre-sell" enough of these houses will the project not be finished?

kind of a long post. just wanted to put as much info I can. I know there aren't a lot of exact numbers in here for you to go off of. I'm more trying to understand the grand schemes and risks involved if that makes sense. I'll be crunching numbers best as my little brain can lol but that's why I rely on the pros to keep me straight.

thanks!

[Bill B.]

1) you can’t use capital returned divided by months of profit liek that, except maybe in your head, especially after selling costs and taxes. But I can lay out some basic numbers. If you want Mei detailed info and an expert send a PM to @Dave Foster he’s been helping people here for years and is a QI. 

2) if you sold for $320k and paid roughly 10% in closing costs you’d end up with $288k. That’s how much you have to buy to not pay any taxes. You’d also have to invest the the $93k in “cash” you receive (without ever having control of the money of course.)

3) failure to do either of these things causes taxes to be due. 

4) ballpark taxes for not doing a 1031 would be capital gains tax on the $288k - 168k, or about $18k, plus 7 years of depreciation recapture, maybe another $8500 (I used 80% of $168k, divided by 27.5 years, times 7 years, times 25%) for a total of about $26,500 plus state income tax. (Likely the higher rate of the state the property is in and the state you live in.)