All Forum Posts by: Leslie Pappas

Hello Chris,

Jason is correct, any funds left over is boot and taxed at Capital Gains rate. Keep in mind you can NOT replace cash with debt, meaning you can not replace the cash you will be pocketing from the sale with a greater mortgage on the two replacement properties. All cash from the sale must be used to purchase the replacement real estate in order to defer all the capital gains. Good luck!

Mackal have you thought about a Delaware Statuary Trust for your real estate portfolio? In case you are not familiar a DST is a passive, fractional investment in turn-key institutional grade real estate. The right DST portfolio can offer you tax benefits, diversification, a steady income and no management oversight. For some that is a con of DSTs, for others is a huge pro.

There are a number of DST advisors on BiggerPockets, I have been in this space for almost 3 decades. DSTs are a very useful hands off estate planning tool. At this stage it seems like you are trying gain as much knowledge as you can to make the right plan, I would be happy to elaborate further. Reach out anytime.

@Laura DenHaan Have you had any luck finding a suitable DST as a back up option? This is something I specialize in and have been doing so for nearly 3 decades. Don't hesitate to reach out, the 45 Identification Form can be complicated depending on your situation.

The value, equity and/or debt on the replacement (purchased) property must be equal to or greater in value to the relinquished (sold) property. 

Time is less important than the investor’s intent at the time of acquiring the property (did the investor intend to hold the property as an investment).

Taxpayers who hold their relinquished property for two years satisfy the requisite intent for a 1031 Exchange (or two tax reporting periods, since in an audit the IRS may look backwards and forwards two tax returns). A holding period of over a year has generally been accepted, but may be subject to review by the IRS. A much shorter holding period has been accepted, where a change in circumstances indicates that the taxpayer had intended to hold the property for a longer period. The IRS will look at ‘investment intent’ and will call a taxpayer quickly flipping property a ‘dealer’ vs. an ‘investor’.

@Dan Rushiti congrats on your success with your restaurants and real estate. I'd suggest chatting with your property manager for advice to evaluate which offerings are suitable and promising in your local area. A very good source of local analysis, rereport.com.

I can tell you what people here have done in my area to set themselves up for retirement:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth. So my advice- build your equity. 

How to play it? You can do it yourself through developing a team (more control but more time intensive); you can seek out good turnkey providers (less control but less time intensive); or work w/experts as a passive investor through syndication (little to no control and least time intensive). I help my clients with the latter when they want to transition away from the hassles of managing properties and tenants and redeploy their equity into a 200 or 300 unit apartment investment in a strong market . 

Welcome Warren, sounds like you are doing pretty well with taking all the right steps. This site is great for networking and getting a ton of real estate information. Best of luck!

It looks like they focus on mobile homes and self-storage facilities. Do you have an idea of what areas of the country they are targeting? My take is that it's vitally important to know who you are working with, and have the history of the players involved. I've seen former players from the 2000's coming back to the industry under different business names, and some of their prior work was less than stellar. It's important to have the advice and perspective of an industry old-timer, in my opinion.

Hi Jack, 

Here's a post I made about helping a client "exit" the landlord stage of his life. I've worked with many investors who sought a life style change and wanted to take a more passive role in their real estate.

https://www.biggerpockets.com/member-blogs/7993/48729-are-yo...

Hi K.S. if you are an accredited investor who is seeking to defer your capital gains tax there is an established industry supporting investors with goals like yours. We help real estate investors re-invest their 1031 Exchange proceeds into an investment product called a DST. This is my field. Happy to answer any questions, feel free to check out my blog on BP for more information.

https://www.biggerpockets.com/member-blogs/7993/73151-what-a...

Welcome Ryan, this site is great for networking and getting a ton of real estate information. There plenty of opportunities out there, my clients are involved in institutional grade properties across the country. My recommendation is to choose cities in safe and economically diversified areas with above-average income and population growth. It can also be safer to diversify your investment properties across the country. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key.

A very good source of local analysis is rereport.com

Best of luck!