Moving to Tennessee... Sell my rentals and buy new ones in TN, or manage from afar?

[Roger P.]

The family and I are strongly considering moving to eastern TN sometime in the next year or so depending on what we can sell our house for here and find something reasonable to purchase down there. We currently live in Ohio and have owned quite a few rental properties in the suburbs of Cleveland, Ohio since about 2017.

One of the rentals has sold so far, and we have another one coming on the market in Lakewood this week. I wasn't planning on doing a 1031 exchange since I don't want to rush buying new rentals in the Knoxville area and risk buying in the wrong part of town or have unexpected issues, in addition to believing that capital gains rates will one day be much higher than 15-20%. But I understand the "1031x til' you die" business plan. I don't necessarily trust property managers, so I'm not willing to keep them and have them managed from afar. Although the really great CoC return %'s we are getting on them right now might be the only reason I would half consider using a property manager and keep some of them after we move.

Basically, we are looking for a home with over 5 acres and at least 3bd/2+bth in the area south and east of Knoxville seems to be the most beautiful and private from what I can find on the MLS... but also very expensive right now. And I've been looking from Chattanooga to Johnson City and Crossville to Gatlinburg and everywhere in between.

And then of course wanting to find rental properties that I can get at least 15% CoC returns from, which I can not find on the MLS when I'm running the numbers lol ... seems hard to find BRRRR worthy deals either anywhere near Knoxville in a decent neighborhood. I'm assuming most people are finding off-market deals to BRRRR there? The places I hold as rentals now are getting 20-40% CoC returns after BRRRR'ing them in 2018 thru 2022 and refi-ing them, so it's kind of sad selling them, but I'd rather get new rentals closer to where we move so I can self manage and hope the cashflow grows over time.

Anyways, if anyone has experienced this type of life change and situation or have had clients go through this, I'd love to hear the outcomes and connect with you!

Thanks

https://www.biggerpockets.com/real-estate-listings/9-cash-on...

[Dave Foster]

@Roger P.

I agree with what @Marc Rice is saying here, If you don't like any properties then you would just leave your list blank and let your exchange die on day 46. We find that over 95% of our clients right now are able to complete their exchanges. But the price of a 1031 exchange isn't much for the time it buys you to see if you can make it work.

You could also shop around for replacement properties prior to selling your relinquished property, or better yet go under contract for a replacement property prior to selling your relinquished property.

Naturally, you must close on the old property before you can take title to the new one, but there is nothing that prevents you from being able to go under contract for your replacement property before your old property closes. You just have to close the sale before taking title to the new purchase.

Another strategy worth considering is known as a consolidation exchange. If you're concerned about the hassle of managing a bunch of properties, you could sell multiple investment properties and purchase a larger investment property in your 1031 exchange.

This way you minimize the stress of owning multiple investment properties while deferring all of the tax, as well as not have to recapture any depreciation.

Just keep in mind your reinvestment requirements to purchase at least as much as you're selling or greater and using all of the proceeds in your exchange. So you just want to be proactive when selling your relinquished properties.