1) Cash out and pay any taxes
2) Do a tax free exchange into another larger property or different property
3) Take some of your equity out as cash and buy a comparable facility and continue on. None of these decisions should be made WITHOUT consulting your tax advisor and your commercial real estate broker.
There are many investing, legal and tax pitfalls and they can come out of nowhere and cost time and money.
If you choose to do a 1031 tax free exchange, there are a lot of moving parts to the process. Two of the most important considerations are 1) marketing your current property and 2) finding a replacement property. Planning is essential because there are many arbitrary time deadlines in a 1031 exchange and these deadlines must adhered to strictly or you may lose your tax deferral status.
In addition, the market in multi family is constantly changing. Capitalization rates are moving around, and investors are very picky and selective now. This situation may change over time, but the apartment market is hard for even professionals to evaluate now as the economy changes. Again, consulting with a knowledgeable real estate professional is a must in this trying market. We are happy to represent apartment sellers and get you the best price for the market. Please call our office at 503-351-5025 for a property evaluation and consultation.