All Forum Posts by: Patrick Orah

Hello BP community,

I am in the process of selling one of my properties (single family rental), but I am having a hard time finding another property to invest in, hence my need for advice with the 1031 exchange. 

My first question is basic - does the custodian facilitating the 1031 exchange need to be in the same state of the sale/purchase of the property?

Can anyone advice on the 1031 exchange process, specifically with how it works and what to expect?

Also, is there a good or bad scenario where the 1031 exchange should or should not be used? The reason for this question is, when I discussed the sale of my property with my tax person, I was informed that the base value of my property (from a tax perspective) is $245K (original purchase of $285K 17 years ago). Therefore, the sale price minus the base value, minus the sales expenses, minus other deductions determined that I would owe around $15K in federal taxes for the sale of my property. So, I wonder, is $15K worth going through the 1031 exchange process especially since I have not identified a new property. Especially sin the new potential property would be at a higher cost basis at the top of the market. 

Additional questions:
What happens if I cannot execute on either identifying and/or closing on a new property within the time required by the 1031 exchange? Will my money be returned to me and then I will be subject to the tax?

Is it required to have the 1031 exchange set up a certain amount of time before the sale of the property?

Can the 1031 exchange be used to purchase multiple smaller properties that equal to a greater value of the property that I am selling?

Can the 1031 exchange be used to buy into a real estate investment group to buy multifamily properties?

Thanks in advance for your responses. 

Patrick

@Philippe Monfiston thank you for the suggestion. I am looking into the different REI groups that you pointed me to.

@Cliff Stafford thanks for the suggestion. I have signed up for a couple of the upcoming sessions. 

@Steven Silbert does the Central Maryland REI social have any meetings virtually?

@Philippe Monfiston what meetups do you attend in the DMV area. Are there any virtual meetups?

@Roberto Hernandez welcome to the BP community and thank you for your service. I am also in the DMV. Born in DC lived in PG and Moco. I have a small portfolio in VA, MD (PG & Baltimore), as well as Texas. I want to build in build in Baltimore and Texas with a similar time horizon as you. Reach out to me with questions as well. I would love to network and build stronger relationships outside of the forums in the DMV.

@Joseph Gozlan great advise and insight. I will add these to my list of questions. 

@John Leake thanks for your response. It sounds like we are in the same boat and you are probably right about having volume. I will end up paying the highest rate if they even accept my Busniess. My problem is that I have small portfolio and I have been managing them myself without much trouble. I pray that continues. What this has done is trap me into believing that self management is not a big deal and I may not need a PM company but I want to cut that cord so that I scale so now I am in the search of a good PM company. 

@Steve K. thanks for your response and I totally agree with you. I have management fees factored into my variable expenses so the money is not the issue. My initial post really is about how the vet property management properly as I am in experience in that area. Based on the response in this thread and what I have read about mixed reviews about property management, when I find a good one I will definitely pay the fee and do what I can to be the best client. 

@Peter Tverdov thanks for your response. I am compiling my questions now in preparation to interview a few companies.