Seller Financing Down Payment + 1031 Exchange

[Daniel Shuler]

Hi all,

I've been all over these forum posts trying to find this answer and I keep going back and forth on whether it can or can't be done, so decided to reach out to some of you experts here.

I'm trying to figure out if a seller, that is trying to do a 1031 exchange, can seller finance the down payment on their current property that they are wanting to sell? I have no idea how much equity they have on the property.

So say the property is listed at $500K, can you get a DSCR loan for say the 70% first position, and have the seller finance the 30% down payment in second position, all while they're trying to 1031 that property into another another one.

Assuming it *is* possible, what would the benefits be for the seller, tax-wise or what would be the ideal strategy here for both buyer and seller?

I keep thinking there's a key detail I'm overlooking here that doesn't make this possible.

Any and all help would be appreciated.
Thanks!