All Forum Posts by: Qi Ming Chen

I am under the impression that I only need to use a 1031 exchange before the closing of sale. At the moment I am already in contract to sell a property and I heard from someone today that I should have sold the property under the 1031 exchange, is that true? If so does that mean I now have to modify the sales contract and get the buyer to sign it again?

@Joe Villeneuve If what I am reading is correct she is managing the property as a payment for the down deposit she would have to pay out of her pocket.  Any cash flow going into paying for the loan on the property become her equity immediately.  

I understand that if the house appreciates then that's great but even if it doesn't she still gets the portion of down payment she helped contribute to.  Unless the down deposit is a really low % of the value of the property and/or the property value is insignificant how can it be a bad deal?  I assume that if the down deposit is insignificant to her or the entire property is insignificant to her then she won't want to participate in the partnership in the first place since it won't be worth her time.

I think some of you are missing the point.  

You get 50% equity for managing the house

The only time this is a bad deal is if the 50% equity is not worth your time managing the property for however long before he gets his down payment back.  

I think that is a good deal base on these assumptions.

- Other investor pay 100% down payment.

- you get 50% equity on the property.

If someone is willing to pay all the down payment for a deal and I get to own 50% equity I don't see where the problem is.  What percentage is the down payment?  You seem to have very little risk in this.  You are basically managing the property in return for your share of the down payment.  I think maybe to sweeten up the deal you can ask the other investor to give you a % for managing the property after he gets 50% of the down payment back(your share) .

So I understand that I can use proceed from 1031 to buy other like kind properties and it seems like it's very flexible on the term "like kind"  properties.   I am selling a mfh rental in NYC can I use the money to buy sfh for primary residence or does it have to be rental?  Perhaps it only has to be rental for a period of time etc?  My current tentative plan is to get a local mfh and a sfh as an upgrade for primary.  

@Joel Owens I am interested in commercial but cap rate seems pretty low for what I can afford to buy. Also, it feels like it's riskier to put everything into a single property in order to achieve a high cap rate. Seems like the way to do it is to pool money from multiple investors in order to get a higher value asset and also to reduce risk. I am reading up on DST TIC and NNN to get a better understanding of this type of investment and this forum seems like the perfect place with so many helpful people that is not just theory crafting but actual investors and developers like yourself.

I am in the early stage of selling a multifamily with a net proceed of around $750,000 in a 1031 exchange looking for passive investment strategies. The OC market where I live seems very competitive and I was wondering where you guys recommend I should be looking to invest. I am pretty hands off and would like to leave any rentals to property management companies.

Thank you both for the replies. 1031 seems like a really interesting tool for deferring capital gains. Hopefully you guys don't mind a few follow up questions. If I own a duplex and I had use one of the unit for personal use many years ago and another unit as a rental the entire time, does this type of mix use property qualify for 1031 exchange? I am under the assumption that only strict investment property qualifies for 1031. If it does qualify, does a 1031 exchange prevent me from putting the entire proceeds from selling my duplex due to it being used for personal use at some point? Related, do I have to put the entire proceed into 1031 including my original down payment or so I have the option of only contributing the capital gain portion? Since at some point I lived in the house as a primary residence(albeit partially) is it possible to also take advantage of primary residence exclusion so only sale price - down payment - primary residence exclusion ends up in the 1031 exchange? Last and most importantly, how much does it normally cost to setup a 1031 exchange?

Does anyone know if it's ok to do a 1031 exchange and use the money to jointly buy property with somebody else or does the owner have to be the same person and no one else?