First foray, insights welcome

[William Springer]

I would welcome some insight from this professionals on this.

My mother owns a home in brooklyn NY, and is about to retire next year. I am contemplating selling the home and using the proceeds for a 1031 exchange whereby she would purchase a condo to live in, and another condo for rental income. Both condos will be cash.

For the rental condo, I was thinking about 3 markets where the rents are not bad and there is room for capital appreciation.

I have finalized my list to 3 places

1. Austin Tx

2. Minneapolis MN

3. Richmond Va

I am thinking about hiring a property manager to collect the rent, and pay the HOA fees while depositing the remainder in a bank account for my mom and I to access.

My working budget is $300k and I am looking to get a minimum of $1.5k-$2k per month in rents.

Insights welcome

[Dave Foster]

@William Springer, If that home in Brooklyn is her primary residence now then it's not eligible for a 1031 exchange.  And it may not be needed.  She would get the primary residence exclusion of the first $250K of profit tax free if she has lived in it for 2 out of the 5 years immediately prior to sale.

If it's a rental now then you can do a 1031 but she will not be able to move into one of the properties for a year or two since the 1031 is for the sale and purchase of investment property only.  She can't exchange for her primary residence.  But she can buy an investment property and later convert it into a new primary.