Quote from @Jon Taylor: @Pete Harper - Section 721 of the Internal Revenue Code allows an investor to exchange property held for investment or business purposes for shares in a Real Estate Investment Trust (REIT) without triggering a taxable event.

This allows you to invest in real estate without triggering the 10% early withdrawal penalty or income taxes, and the gains can grow tax-deferred (or tax-free in a Roth IRA).

The main reason I'm asking this, is to understand how much cash I need to save up in reserves before pulling the trigger on a deal like this?

Your "buy in" funds could potentially be used for improvements to the other properties you mentioned, without triggering a taxable event.

I have found myself in a place where in a recent tenant of mine is suing for personal injuries.

I've considered putting solar panels on my investment properties, however, I have not pulled the trigger yet.

In April 2024, I finally saved enough money and pulled the trigger.

So, I'm challenged right now finding a property that will cash flow well enough for me to pull the trigger.

The assignment agreement addendum was signed a few weeks into escrow.I was not worried that this would trigger the seller to back out.  

Your zoning should be ok, but you want to do everything by the book (which can be costly) to percent future insurance claims or injury claims in an unpermitted basement living space.