Seeking Advice on Lazy 1031 Exchange and Real Estate Development Strategies

[Kevin Stearns]

Dear Bigger Pockets Friends,

Howdy! Hope y'all are doin' well. I'm a country boy at heart, but I also appreciate straightforward advice. I'm reachin out for some insights on a few real estate ventures I'm workin on. Here's a bit about me and what I'm up to:

Background:

• Industrial Property: I've got an industrial property with about $1.5 million in equity.
• Real Estate Experience: I've been involved in multifamily properties, developed some industrial spots, and managed short-term rentals.

Current Projects:

1. 1031 Exchange Plans:
   • Objective: Considerin a 1031 exchange from my industrial property into assets like self-storage, multifamily units, Section 8 housing, or mobile home parks.
   • Request: Given the current market and lookin' for steady returns, which asset class would y'all recommend?
2. Land Subdivision:
   • Property: Got 135 acres under contract that I'm plannin to subdivide.
   • Objective: Seekin ways to structure this deal to minimize capital gains taxes.
   • Request: Any effective strategies y'all have used in similar situations?
3. Short-Term Rental Development:
   • Property: Purchased a riverside house with $125,000 in equity.
   • Plan: Plannin to expand the septic system and convert it into an 8-unit short-term rental.
   • Request: What financing options would y'all suggest to fund these improvements?
4. Cabin Park Development:
   • Property: Own 24 acres on a river with two cabins, all paid off and valued at about $1.5 million.
   • Objective: Aimin to develop this into a cabin park.
   • Request: Can y'all recommend any designers or firms that offer quality services at reasonable rates?
5. Business Sale and Reinvestment:
   • Scenario: Plannin to sell a business and expectin to net around $3 million.
   • Objective: Want to reinvest the entire amount into real estate to defer capital gains taxes.
   • Request: What strategies or investment vehicles would y'all recommend for this?

Additional Considerations:

• Professional Development: My wife's workin on obtainin real estate professional status.
• Education: I'm considerin pursuing the Certified Commercial Investment Member (CCIM) designation to enhance my knowledge and network in commercial real estate.
  • Request: Any thoughts on the CCIM designation or other groups that could support my growth?

Looking for Experts:

• Deferred Sales Trust: I'm seekin a real estate strategist and attorney familiar with Deferred Sales Trusts to help reinvest the proceeds from my business sale into real estate.
• Cost Segregation: Also, need recommendations for professionals in cost segregation studies, especially for cabins and industrial properties.

I truly appreciate any wisdom, experiences, or resources y'all can share. Your insights will be a big help as I navigate these ventures.

Thanks a bunch in advance!

[Todd Anderson]

@Kevin Stearns,

Looks like you have a lot of irons in the fire.  This looks like some exciting projects you have planned.  

I can only add some general comments to this.  I would strongly recommend the investment into Multi family units or Storage units, the other two of your thoughts although many times work out great have a lot of risk attached. 

I have done many of the projects that you are looking at but not in your area. I don't have any local expertise in the right people to help. One thing that may help you in a number of the questions, when I sold my business 3 years ago I looked at the new and growing strategy of Build to Rent communities. I think we will find that this will be a growing sector of REI. For an investment vehicle it offers one main advantage over traditional Multi Family in that you have much more flexibility in exit. You can sell the the entire development if that fits your strategy or you can break the development up and sell the parts.

As for the additional considerations.  It will be greatly beneficial to have your wife become a Real Estate Professional.  That way you can maximise the benefits of the cost segregation. I have used two online companies to do cost Seg's.  DM me if you want contacts.  I have worked a lot over the years with CCIM.  I feel it is a great organisation to learn from.  Years ago I carried a designation, it didn't do much for me at the time but, the people there are great and very knowledgeable about their subjects.  Anytime you are learning it is beneficial.

Best of luck with all your ventures.  I am in a New Construction Investment space now and would be happy to help in any way.