Internal Revenue Code 1031 offers the real estate investor a powerful tax strategy that when properly used enables him or her to build wealth at much faster rate. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.
Most investors, at least at the beginning of their real estate investing career, concentrate on investing in single family homes. While this is lucrative and relatively easy to get into, but if you are serious about creating more wealth and at much faster rate, then investing in multifamily apartment buildings is the best way to do it.