1031 Exchange: Should I exchange my first property to scale up?
Hey BP Community,
I'm a new investor on the north side of Chicago and I am in the final phases of a gut rehab of a condo unit that is my first property. Bought at $155K, $50K rehab, hoping to sell/exchange at ~$215K. Initially, my plan was to BRRRR it, but I have decided that I am not interested in holding onto an individual condo unit and I would rather have a building (ideally 3- or 4-plex). I have a few questions about the 1031 exchange because I'm wondering if that's my best option.
Also, something I think is important to share for this post: I have zero net worth, about $40K in credit card debt and about $25K on a low interest loan. However, I have a very steady job as a firefighter and I just passed the Real Estate Agent exam so I will be working as an agent within the next few weeks to pay off my debt more rapidly with extra income from that.
Anyway, here are some of my questions:
1) How much will I have to front for the down payment on the new property? Do 1031 exchange guidelines require more down payment than other standard forms of buying?
2) Would it be possible for me to secure a loan that would pay for my rehab project? It would be unbelievably helpful to not have to pay completely out-of-pocket again like I did for my current project (it's the reason I have CC debt at the moment). If this is an option, it would take so much financial stress out of the equation.
3) I understand that to complete the process of a 1031 exchange, I will need a "qualified intermediary" to act as an escrow agent so that I never touch the money when I sell. Any recommendations for who would be a good resource that I could consult with for this service?
Any other advice would be greatly appreciated. Also, anyone who is looking to connect and network in Chicago, I'm just starting out my real estate journey so I'd love to bounce ideas or just plain make new friends in the field. Thanks for your time in reading and thanks for any feedback. I am super grateful for this community and everything you guys do.
Best,
Tom