A lawsuit, divorce, bankruptcy, death, - all could really jam up things and cause you to not only lose your 1031 exchange but the money they are holding as well!!

They are very differentIf it’s a foreclosure it could take 12-18 months but if the property has equity the borrower will file bankruptcy (almost given).

In the first example, the asset may be priced at a 10 cap but the tenant has a high risk of going out of business before the end of their 10 year lease term so after year two, they file bankruptcy and the owner is left with a negative return as they are funding all expenses themselves and paying to re-tenant the building.

So to clarify, AGENCY to be declared and documented is REQUIRED. 

If your seller files bankruptcy after the sale and the Trustee believes the sale was fraudulent because it was for below market value and seeks to set the sale aside, I think the title insurer might deny coverage. 

And this is not the case for a true flip, as in Basit's #1.Mentioning #2 creates a dangerous incentive to ignore the rules applicable to flipping and rely on a flimsy declaration of "intent" to hold the property as a rental. 

Moving on there was something that stuck with me while being here which was “Write your declaration of independence” meaning defining what will set YOU free. 

I was waiting for the President to declare “mortgage forgiveness”2.

Here's how:1 - New roof cost about $5k.2 - If you pay for it while you own it, it's a cost to you since it comes out of your pocket in the form of cash, that you have to recover before you make a profit.3 - If you bury it in the original financing when you buy, (Terms - 4.5%, 30y am), it will add $25/m or $300/y.4 - If you sell the property in 5 years, your cost (in lost CF), is only $1500.5 - Now, when you list the property for sale, and declare a new roof only 5 years old, do you think you can get at least a $1500 increase in your sale price?...

If you declare a property as 1031 eligible you can defer capital gains on the sale.