hello Dave, the property was initially purchased as a buy and hold. I have owned it around 6 months, and it had a tenant when I purchased it.
that tenant moved out first of the year, and the place was very rough. (It was rented for 500. That tenant had been there 13 years. I planned to remodel and brrrr. After the remodel, I was planning to rent it closer to 1000)
Once the tenant was out, I went in and basically gutted the place. As I’ve been learning more about real estate and trying to get more rentals, I’ve been learning to wholesale. And have completed a couple transactions. A couple weeks ago I stumbled upon a for sale by owner sign. And called on it, in hopes I could possibly get it under contract to wholesale.
the place was nice. Turn key, and rent ready. The woman selling it was an older woman who’s husband had passed and she was selling there rentals.
I got it under contract for 53k. And I think I could wholesale it for 75k
as I got to thinking, the property I have gutted is similar size and a similar property. I got it for a steal, because I bought it off of my aunt.
So I decided to try to sell it. As is, in order to be able to keep the turn key property.
I have it under contract for 58k, when I bought it from my aunt for 42,500.
if I get the 58k for it, I can turn and purchase the turn key property for 53k. And have a rent ready house.
as opposed to my gutted property which is going to cost at least another 15k to get up to standards.
it’s a no brainer play to me, but I purchased it for 42,500 and I now have it under contract for 58,000. I don’t want to pay taxes on the gain.
Quote from
@Dave Foster:
@Blake M Pursel, If you want to do a 1031 exchange you will have to sell your old property before you take title to your new property. A reverse exchange let's you control your new property as your QI takes title and holds it for you. But at the end you have to close your sale before closing your purchase. A reverse is a pretty costly alternative if you can simply adjust your calendars and timelines other ways.
What concerns me more is the property you are selling. If you purchased that property primarily to fix and sell then it would not qualify for a 1031. 1031s are for property you purchased with the intent of holding for productive use. So by nature it is more of a buy and hold strategy.
