The calculation involves:Selling Price: $1,075,000Original Purchase Price: $355,000Depreciation Recapture: $105,300 (taxed at 25%)Capital Gains: Sale price minus original cost, minus depreciation, minus selling costs (~15-20% federal capital gains rate for their income bracket).State Taxes: Since the property is in California, state capital gains taxes will also apply.Given the multiple layers, I’d highly recommend your parents work with both a CPA experienced in real estate and a qualified intermediary for the 1031 if they choose that route.If you need recommendations for professionals in Illinois or California, feel free to ask!

If you choose to go with this strategy you could complete your exchange and immediately do a cash out refi.

Currently I think 200k being the upper limit of investment makes the most sense and is within my risk tolerance range.

So choose wisely and good luck I like the passive nature myself of boat and RV storage.

If Toledo is somewhere you choose to invest and you have any other questions, please feel free to reach out!

From choosing a property management company to landscaping companies.  

We teach an “investment product agnostic” strategy, focusing on educating investors on performing due diligence, establishing their own risk tolerance, and choosing their own investments.

There are several to choose from!

I am generally curious as to why you would choose to do this? 

Establish an emergency fund and target stable long-term rentals or short-term rentals in markets you understand.House hacking or private lending can offer alternative entry points depending on your risk tolerance and hands-on involvement.