All Forum Posts by: Alex Sarnoff

Seems like everyone is jumping on section 8 because it's trending or in-vogue. It is not a great subsection of the residential asset class. Capex will be very high and will kill net income regardless of where you invest.

We are soon listing our first property for a 1031 exchange. Upon closing, we will have 45 days to identify 3 replacement properties and then 180 days to close on one of those 3.

This seems like a concerning setup. What if all 3 of those identified replacement properties sell to other interested parties during the 180 day closing period and we never get any under contract? Can I put one of the 3 replacement properties under contract before the 45 day period ends and identify another 2 as backup properties?

How soon should I begin sending out LOI's on properties? Should I have agreed LOI terms with all 3 properties and sort of "lie" that we intend to use them for our contract even though we are only choosing one of three? I assume we wouldn't want to use one of our three selection properties on a property that could sell to someone else soon once the 180 days begins.

What if I get a property under contract and the 180 day closing window begins, then the seller backs out? Do I then have to try desperately to get one of the other 2 properties under contract and closed by the end of the 180 days?

This is stressful and makes taking the tax hit look appetizing. 

Hi Everyone,

We are exchanging for the first time from MFH to NNN retail properties.

 We have ~$4mm in equity in the downleg and plan to leverage to $8-10mm for an upleg purchase. The downleg is in the final stages of creating a marketing package from the broker that we're using and should be listed in the next couple weeks. I have already selected and contacted a 1031 accommodator company.  

When should I start the mortgage preapproval process for our upleg?

When we purchase our upleg, how can we best negotiate to protect ourselves? Should we begin the LOI phases before the 45 day selection period begins or wait until the 45 days starts to send out LOI's?

Basically, a seller knows their property is our 1031 selection upleg during the 45 day period. That doesn't give us many options for negotiating contingencies such as repair requests etc. It seems like they have our arms twisted behind our backs in negotiations. Is there any way to navigate this? Should we say that we identified many other properties during our 45 day selection period?

Are there any terms we should add to the transaction language to protect ourselves from the seller backing out of the contract? For example, if a seller knows we are in a 1031 and says "no concessions/repaur requests, take it or leave it"  after our 45 day identification period is over we are screwed with a bad deal. In the past when buying a house, we had a seller say "on second thought, a lot of other offers are coming to the table, we will need to raise the purchase price $X to continue" which would also put us in a bad position if our 45 days is over.  

Any help is appreciated. I've sold properties in the past but this is my first 1031 exchange.