ladynoknow: Section 1031 requires an exchange of some property for some other property. It does not provide for - actually it **prohibits** - the reinvestment of the proceeds from the sale of one property by the seller into the purchase of another property.
If you are talking about, or even just thinking about, "investing the net proceeds" from the sale of your rental property, you're gonna end up where you don't want to be. You have to envision the transaction and refer to it as an exchange of property if you want to ensure that you will have any chance of being sure to qualify for Section 1031 deferral of your potential income tax liability.
Please do yourself a favor and get some "hands-on" professional help before you get your debits and credits mixed up and put some money in your account and then end up with a tax liability that you can't afford to pay because you invested your entire liquid assets in the "replacement" property!!
It has happened. Make sure it doesn't happen to you.
The absolute rule is that you are not allowed to touch, or even to just be able to touch, the proceeds from the old property. Stuart B. is giving it to you straight.