How/where to deploy leftover 1031 funds

[Brandon Beaudoin]

Evening folks!

Hi BP! 

My wife and I have some leftover 1031 funds that we're looking to deploy into another investment here soon to stay in line with the IRS timelines. We've used about 2/3 of it purchasing another cabin in TN but our DTI is bogging us down to a dollar amount that doesn't really put us in a great position for another property (pre-approved for $300k). DTI has been impacted as we've purchased 3 properties in the last 12 months despite having a pretty good paying W-2 and qualifying income from our investment properties. 2022 would be fine once we file our 2021 taxes but we don't have the luxury of waiting due to 1031 timelines.

That said, we do have the opportunity to get in on an apartment syndication and overall the projections appear to be pretty good along with the business plan/strategy. Our QI still holds the remaining funds but we're considering deploying them to get in on this syndication where we can conservatively see annual cash on cash returns of ~8% for the next 3-5 years, a projected conservative return north of 80% and IRR of about ~15%. The first year cost seg looks like it'll mitigate our capital gains taxes so forgoing another purchase through 1031 would mostly be offset by the MF cost seg (payout of maybe $1k on $50k investment of 1031 funds).

My questions to the brain trust are:

1.  What are we looking at from a tax hit when we exit this syndication?

2.  Are we able to 1031 those funds on sale of the MF property if investing as an individual?

3. What other options exist to deploy these remaining 1031 funds while backed up against DTI limits? Commercial loan? Others?

4.  What are we missing or should we be concerned about?

Thanks much,

B