?- Financing the Back End of a 3-for-3 Exchange; Maxing Mortgages

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Doing our first 1031 exchange, where we are selling a package of 3 single-family properties, which we hope to turn into 3 or more turnkey properties. Currently, all 3 properties are held jointly (and equally) by 3 individual partners, not as an LLC.

When we purchase and finance the 3+ properties on the back-end, we want to structure our deals to maximize the # of traditional mortgages that we can get between the three partners.  Questions:

  1. If we get three new properties on the back end of the exchange, can each new property be financed under only one of the partners names?
  2. From a 1031 perspective, do all of the purchased properties have to be held in all 3 partners names?
  3. If Partner A takes out the mortgage for any of the properties, does holding the deed in all 3 partners names cause any issues for the mortgage company?

Any advice is truly appreciated.  Thank you!

@JJ Mayer , Great question.  Since you all own the three properties as Tenants in common each one of you actually owns a piece of real estate that happens to equal 1/3rd of the total of the three.  This gives you some very interesting options regarding title and financing.

1. You could all go together on one exchange (if the sale is going as a package to one investor).  Your lender will determine whether each one of you can be the guarantor to the total without the other two.  Usually they'll want all deeded owners to guarantee the notes.

2. Each one of you could do a separate exchange for your 1/3rd.  This would involve each of you purchasing a property worth at least 1/3rd of the total of the sale and using 1/3rd of the cash.  This would allow each of you to take out an individual loan and each purchases a property on their own.  If you wanted to stay together you could do so with a group management agreement.  or a quit claim of the properties with lender approval.  

3. You could also go forward as one group and purchase three new properties with all as guarantors and take out a commercial type loan.

3. There's other options but all are variations on the theme.  Your QI needs to be one stepping with you as you go forward.

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