So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

Now investors, especially the newbies, are chasing returns by going after higher risk investments - many NOT really understanding the true risks.Many more investors will be losing money and choosing to liquidate real estate - which will be buying opportunities for the better prepared investors.

When one machine goes down you start losing money in a small way. 

Just try to sell it to someone else for anything so you don't lose all of your money.

There are other downsides that need to be added to this list, both related to resident psychology.When a resident has a security deposit, they consider that to be their cash and they don't want to lose it. 

Stay in and be part of this 721 or lose my investment most likely.

The challenge is free, so there’s nothing to lose—except maybe a few missed deals if you skip it.👉 Reserve Your Spot for FREE Here!

My broker advised me to "bite the bullet" and close the deal, telling me that I should be glad I wasn’t losing money on the deal.

So - somewhere 2 hours away, or somewhere you like to vacation in, or where all your family lives, or where you plan to move someday.Too many people are trying to do exactly what you're doing - pick a market based on a formula - and they end up buying a random 'cheap' property thousands of miles away, turn it over to people they've never met or even spoken to, and then... lose money.  

If the 1st then goes into foreclosure, you are in deep trouble, you have to pay it off or lose your money on the 2nd AND lose the property. 6.