I am considering selling my duplex in SoCal and taking that money out of CA. I nearly break even on the rent/mortgage but if I am able to escape CA on a 1031, I could potentially be positive cash flowing in the $1500-$2500 a month range on the same numbers. Here are the very ballpark #'s.
Sales price $1.2m
Net $1.1m after sales expenses
Mortgage payoff $800k
If I wanted to do a 1031 on 8-12 SFRs priced in the $80,000 to $150,000 range and have about the same #'s (without adding a ton of my own funds), what are my options for purchase loans? I assume that I can't have 8-12 individual mortgages?
Had some credit challenges last year, thanks to COVID. These are all handled at this point, with no running lates.
FICO around 620 (Experian 641, Equifax 622)
Options? Forget it and don't even try? Thoughts? Thanks so much in advance!!!
Just a few thoughts. Number 1, you need to get with a lender that can do a rapid rescore for you. Some Loan Officers will do these, others wont waste their time doing these because of the cost to them and the time it takes versus the borrowers that don't need a boost. Realistically, you only need a boost to 620 at minimum to get to the loan programs you will need. Although a higher score will get you much better pricing, so have this discussion with any loan officer you are thinking about doing business with. I would also, get this done before you put your property on the market. Because once you put it on the market, things move fast, so you don't have time to fix your credit while you are in the middle of all the details, so get the credit score boosted 1st.
You will need a loan officer that is licensed in the state where you plan to buy your properties. Let me know what state that is in, I can refer a loan officer with our company that can work with you on the credit score boost as well as closing the loans you will need.
3rd, with the property prices that you have mentioned, it sound like a state where you can cash flow well from the properties however there isn't much appreciation in those states if I have that correct. So the caution you need to be aware of is that if you get a bad renter in those areas, it can eat up all or even more than your cash flow. Also your are not getting much appreciation, so it could make exiting the property difficult, so vet those renters as heavily as you can, because you could get in a very negative situation with the wrong renters.
I hope this helps?
Thank you Kevin. I updated my post. I ran my scores a few minutes ago. 622 Equifax and 641 Experian. So I guess I am in the right ballpark to move forward?
Can I have that many individual loans? Or would I need some type of portfolio loan? Or what are my options?
Yes I am ready to move away from appreciation and into the cash flow model. CA makes me crazy. Thanks for taking the time to reply to me!
You can have up to 10 conventional loans out at a time. Once you have hit your 10 limit, you would then move on to either Non-QM / portfolio loans, or you refinance most of your properties into a commercial blanket loan, thereby freeing up your Fannie Mae / Freddie Mac slots for a new round of 10 loans.
The caveat is that when you do the Non-QM / portfolio or the commercial blanket loans, that you are not required to have a personal guarantee on those loans, otherwise if they require a personal guarantee, then the still count in the 10 financed property rule. So you need a lender that specializes in working with investors, so they get all parts correct.
PM me, I can connect with you and get you to the correct loan officers.