You can use 1031 exchange with co-investors

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Your question seems to imply that you want to buy a new investment property with other investors. You can do this in the context of a 1031 exchange, but it can get complicated. For one, you’ve already sold your condominium for $225,000. This would mean that your share of ownership in the new investment property must be at least equal to or greater than the $225,000 value of your former condominium.

Also, the condo you sold must have been an investment property. That means the condominium wasn’t your personal residence and you owned it for investment purposes (i.e., it was rented out). If that’s the case, when you sell the investment property, you need to set up a version of a 1031 exchange known as a “deferred exchange.” You set up the deferred exchange usually with a company that specializes in

1031 exchanges.

Here’s an example of how this might work: Let’s say you and some investor friends want to buy an apartment building together and the building is worth $1 million. In this example, you and your friends would have to buy the building as tenants in common — meaning that you would own a certain share of the building and your friends would own the balance. If you purchased a one-third share in the building, your share would be worth around $333,333 of the building and would exceed your $225,000 sales price. You would be a onethird owner of the building.

Finally, you must remember that your ownership in the new building should mirror the ownership in your old building. This means that if you owned the old condominium in your name, you need to own your one-third interest in the new building in your own name as well. And, you can’t set up a limited liability company, or LLC, to own the new building and own your one-third share that way. Your ownership interests must be held in the same way.

One last thing to mention is that some companies specialize in giving investors the ability to buy into a type of property that currently exists. For example, a company may specialize in tenancy in common arrangements and handle the ownership of a portfolio of buildings. If you show up with $225,000, they may be able to place you in one of those properties with an ownership interest equal to the amount you invested. (Be sure to ask a lot of questions, including how you can dispose of your share if you decide to purchase something else and what fees are involved, and then make sure you speak with a smart real estate attorney who can review the documents before you sign.)

For some real estate investors, this sort of investment hits the mark while others prefer to control their own real estate investments.