Can i do 1031 exchange to buy 2 houses?

Question

If i own 70k in equity

Can i do 1031 exchange and buy 2 properties and keep the property without selling it to get the 70k?

Or should i do a HELOC?

Dave Foster · Answer

Account Closed,  It's two different processes.  The 1031 is a sale of real estate followed by a purchase of real estate following the 1031 rules.  You can sell one and buy two or more.  And when you do it this way you get the use of the full equity.

A refi/loc/heloc is borrowing against the equity you have in a property.  You can use the refi proceeds to buy additional properties.  The biggest problem of a refi is that you only get access to 65% - 75% of the equity.  The bank will want to keep a margin of safety for them.

If your current property is a great property and can sustain a refi then that would be a great way to go.  If it's marginal or if the refi pushes it NOI negative then a 1031 might be the more reasonable approach.

Sean Johnson · Answer

Account Closed, you have to sell the property in order to qualify for a 1031 exchange.  If you are just looking to use the equity in your house, a HELCO sounds like what you are looking for based on the info you provided

Matthew McNeil · Answer

Huh?  Can you provide more clarity?  Give us more details rather that us attempting to guess what you're trying to do so we can advise you correctly.  Cheers!

Can i do 1031 exchange to buy 2 houses?

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