Unfortunately, your accountant is right about this one.In a 1031 exchange, the goal is to roll over all the proceeds into the new property to defer the capital gains tax.

Find a lender willing to be in 2nd position or find family or friends willing to invest in your project---if they have IRAs, they can roll over into a self-directed and invest in your project. 

I’m about to roll over a 401(k) to a SDIRA and I’m wanting to use funds to renovate a rental property that I already own that is in dire need of repair before I can rent it again.

@Frank Patalano Need to rollover $ out of my 401k and first wanted to do so via a comoany and that took a long time to learn and i.d. possible cos.

Probably why 90%+ of our investors roll over investments via our 1031 exchanges each time. 

Or...you could talk to an attorney and start your own C Corp (for investing in real estate) and then roll over your 401k via a ROBS (roll over for business something).  

So most likely a 1031 would not benefit you at all.Thanks for the reply Dave.It's too bad that if you profit $3M on an investment, you can't "rollover" $1M into another investment (1031) and then cash-out the other $2M and pay taxes (capital gains), for example. 

Some fraudsters try to avoid repaying investors' principal by convincing investors to "roll-over" their promissory notes upon maturity.

But at that price point , that will be fairly minor.Once you hold the hard money loans for the seasoning period the portfolio lender requires, just roll over into that.

In other words, you rollover traditional IRA funds into your solo 401K (which is allowed) and then use debt to help purchase a property.