Financing a SFH and a MFH

Buying & Selling Real Estate
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Financing a SFH and a MFH

Alexander Wodlarski
Member since 2020 · 7 posts · 2 votes

Hi All,

First time posting. I'm looking to purchase a SFH and a MFH at the same time or within weeks of each other.

currently we own a SF rental with about 45k in equity, and making us $400 a month. Escrow at 1001/month and rents for 1400/month.

we want to sale our current rental to purchase a SF student rental with good cash flow. 155k PP 15% down and monthly payment of 990/m and rents for 1860/m through 2021. 

if we can't sell our current rental fast enough to do a 1031, would taking out a HELOC on our primary home (65k in equity) be the next best thing? Then paying the HELOC back once our current rental sells?

we are also looking at a MF student rental for 200k, 25% down and a monthly payment of 1000, and rents for 2650 through 2021.

After we close on the first deal and pay back the HELOC we would have the same 65k available to us and use that for the down payment.

we plan to sell our primary next summer to pay back the HELOC and buy another primary with a 0% down VA loan?

does this sound like a down plan? Anything else I should be looking at?

Thanks,

Alex

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  • Michael Ohara
    Investor · HI · Member since 2017 · 328 posts · 124 votes
    6y

    Looks good. Any reason you don't want to hang on to your current rental?

    0Reply
  • Alexander Wodlarski
    OP
    Member since 2020 · 7 posts · 2 votes
    6y

    Thanks. The only reason for selling our current rental is to access the 40k in equity for a down payment on a better cash flowing property. I can't think of another way to finance this.

    0Reply
  • Adam Nishikawa
    San Diego, CA · Member since 2016 · 86 posts · 46 votes
    6y

    Hi Alex, as an option you consider a Revers e Exchange if you wanted to incorporate deferred taxes into your new investment. Brief summary below, reach out with any questions! It would permit you to acquire their replacement property before the relinquished property is sold.

    Under no circumstance may an investor be on title to both properties simultaneously. 

    Option A: Park Replacement Property — Exchange Last
    Option B: Park Relinquished Property — Exchange First
    This scenario more commonly occurs when financing is obtained for the acquisition of the replacement property. 

    Issues to Consider
    Any funds brought in for the acquisition of the replacement property by the investor may be reimbursed to the investor from the proceeds of the relinquished property and are not subject to capital gains tax. Any remaining proceeds can be utilized to reduce any debt previously incurred for the acquisition of the replacement property. 

    DM for more info! Best of luck with all of your options. 

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  • Alexander Wodlarski
    OP
    Member since 2020 · 7 posts · 2 votes
    6y

    Thanks for the info about the reverse 1031, I did call a few title companies and it seems to expensive where I might be better off paying the capital gain tax. 

    The three companies I called were at about 5-6k to complete the reverse. Maybe a reverse will work with bigger, more expensive properties.

    Thanks again,

    Alex

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