Looking for loan options for a 1031 exchange but will retire

1031 Exchanges
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Looking for loan options for a 1031 exchange but will retire

Norman Lee
Member since 2021 · 1 post · 0 votes

I have an investment property (SFR) in California in the San Francisco Bay Area which I want to do a 1031 exchange on an out of state multi unit property however I will be "retiring" (done with the corporate rat race) in 2 months and will not have any W-2 income anymore. Property should sell for $1.4M and my current remaining loan balance is $345k. Given my "unemployed" situation, even though I would be able to put down a significant down payment from the 1031 I don't think I would be able to qualify for conventional financing for the $345k loan for the exchanged property, so I'm interested to see what my next step should be for financing. At the same time, I'm interested in finding the next property for $1.4M or less. I'm not opposed to paying some capital gains tax on the boot.

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John Warren
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
5y

@Norman Lee make sure you are talking to a great lender. There can still be ways to get get a traditional loan even if you have no W-2. I am looping in my guy @Joshua Jones on this one. 

Also, make sure you connect with a great intermediary to help with the exchange. I use @Lauren Speidel for all of my 1031's. 

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    5y

    @Norman Lee make sure you are talking to a great lender. There can still be ways to get get a traditional loan even if you have no W-2. I am looping in my guy @Joshua Jones on this one. 

    Also, make sure you connect with a great intermediary to help with the exchange. I use @Lauren Speidel for all of my 1031's. 

    3Reply
  • Joshua JonesPro Member
    Member since 2020 · 70 posts · 32 votes
    5y

    @John Warren thank you. 

    @Norman Lee if you wanted to discuss how this would work, let me know. In terms of income, just because there is no "W2" does not mean we can not do anything. Could be under Freddie's asset base program, depends on your age, and other forms of income if any. Then we could figure out what you are dealing with.

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  • Ray Slack
    Investor · White Haven PA · Member since 2014 · 362 posts · 221 votes
    5y

    I would think a commercial loan on the new multifamily would take the potential rents of the new property as income along with your MASSIVE downpayment I'm sure you would not have an issue getting a loan. 

    2Reply
  • Justin Phillips
    Lender · Phoenix, AZ · Member since 2018 · 440 posts · 256 votes
    5y

    @Norman Lee I'd assume with your landlord history and large downpayment that you'll be able to find a loan fairly easily. 
    I always advise my clients that it's a good idea to open a 1st position HELOC on their primary before they retire. That way, you can have access to 80% of your equity for the next 30 years. After you retire, it's much harder to get loans, so it becomes extremely helpful to have a large credit line at your disposal.

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  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    5y

    @Norman Lee I agree with @Ray Slack.  Especially on the commercial side there are plenty of lenders who will offer consideration for current and potential rent roles.  You may not be able to turn that 1 mil ish into a 20% down payment.  But I think you'll be pleasantly surprised with you can get with that as a significant down payment.

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