All Forum Posts by: Todd Young

I don't use a CPA, I use IPX1031 as a qualified intermediary. They probably know more about 1031 exchanges than the typical home town CPA does. 

No. A 1031 exchange must be into like-kind investment. So if you are selling rental property then you must buy rental proeperty.

My experience is that condo associations typically charge so much in monthly HOA fees that any potential investment income gets eaten up by that fee. You are better off exchanging into an SFR, multifamily or DST investment depending on how much you have to invest.

But as always, if the deal pencils and you are happy with the returns then don't let me stop you from finding your niche in downtown Boise condos. Just compare the returns to other property types.

Thanks Mathew, that number doesn't work for me for Spokane Snow Removal. Is there a specific company you recommend? 

Can any Spokane folks give me a referral from someone to do snow plowing in my parking lots?

@Simon Obas I had a very similar situation. I had a single mom apply for my 3br house. I felt compassion for her. She really needed a place to stay. She was a contract nurse and made $20/hr. It seemed like good money but really this was a little over 2x the rent. Come December she only got 3 weeks of pay because her office went on vacation. Then her car broke down. She had to try and feed and clothe her kids, pay car insurance, fix her car, etc on like $500. So she got behind on her rent. A couple months later and I was serving her pay or vacate notices because she kept getting further and further behind. She grew to hate me because I was hassling her for rent money. Eventually she left and left with a big debt. I didn’t pursue her to pay her past rent because I realized that I contributed to the problem by letting her rent the place in the first place. Lesson learned: don’t let people move in who can’t afford the place. Our income greater than 3X the rent requirement isn’t for us so much as it is for them to not get themselves into a situation where they can’t handle normal things like getting sick, having your car break down or just “𝐋ife” and also pay the rent.

@Arn Cenedella

Thanks for this well-explained advice. I met with the broker yesterday who told me that, based on his firm’s relationships with owners in my purchase geography they would have no problem finding a replacement property. After hearing from a few different investors that my contingent-on-sale-offer would be too weak to generate seller interest I’m convinced. I went ahead and listed my 7 properties with these guys who have a team of marketers who will aggressively market them.

Now, when someone who is trying to sell me something says “no problem” when others are definitely having a problem I’m naturally skeptical. But this particular agent sold a billion dollars in multifamily real estate last year, and his firm sold multiple billions... all by finding off market deals. I guess I’m convinced.

I’ll post again later to let you know what the outcome was.

I really appreciate the advice. I’ve been a mentor to many 1st time investors, but I’ve never had a mentor myself and this new stage I’m going into feels much more risky than deals I’ve done in the past.

Todd

I first posted this in the Buying and Selling Forum, but I think it is better suited to this forum as ya'll are big multifamily investors. 

I'm ready for my first "Big" 1031 exchange. I've done several 1 for 1 exchanges, trading a SFR for a triplex or a duplex for a fourplex. But now I'm wanting to up my game, upgrade my clientele and get a 30-50 unit complex. This is uncharted territory for me so I would love some advice from people who have done this.

Here's what I'm selling - I have a portfolio of duplexes triplexes and fourplexes - 7 of them that I'm ready to sell. They are all value-add plays that I've improved, and increased income. They are mostly in the Everett area of Washington with one in Marysville one in Seattle. I've had two different residential multifam realtors give me CMAs for each property and the portfolio is worth about $6.3mil, of which I should net about $2.6Mil for my down payment.

So far, I've had a couple commercial brokers out scouting around looking for a deal for me in the 30-50 unit range in South Snohomish County in the $5mil - $10mil range. So far they haven't found one and I'm getting conflicting advice from the brokers about how to go about this.

One says I should wait until I have my replacement property identified - since that could take a while - and then list the small properties once i'm under contract, making the deal contingent on the sale of those properties. I'm pretty comfortable with this tactic. as I'm nervous about running up against my 45 day identification deadline.

One says I should list my 7 properties as a package deal, I might net a little less (5-10%) but the benefit of closing everything at once and being able to snag a deal on an upleg is worth it. Furthermore he says I should market and sell my properties first without having any replacement identified because no seller is going to take me serious, or want to tie up their property with a buyer's selling contingency.

When I did a 1 for 1 exchange it has always been kindof easy, I was usually able to find a buyer and a replacement property at the same time it seemed. But this twist of trying to sell 7 properties is tricky and stressing me out!

What have you done? Have you sold multiple properties to exchange into a larger one? If so, did you list and sell your properties first or wait until you identified a replacement? Did you sell your portfolio as a package? Or am I better off listing them individually?

Thanks! Todd

I like the advice of quickly finding a spouse! A marriage and divorce is a lot less expensive than $37K (15% of $250K).