Capital Gain Tax vs Higher Loan Interest Rate

Capital Gain Tax vs Higher Loan Interest Rate

North Hollywood, CA · Member since 2012 · 34 posts · 3 votes

Hi All:

Just wondering what others on here would do?

I'm looking to perform a 1031 exchange for a single family home that I've owned for 3 years for a duplex and I've come across some bumps, mainly financing bumps.  I have 10 investment properties (mixture of single family homes, duplex, triplex and fourplex) and my FICO score is just below that magical minimum of 720.  I've searched for different lenders and now it seems that the best interest rate I can get is 7.7 percent.  Even at this interest rate I will still have some cash flow of approximately $500 dollars.  Alternatively, I can take the money from the sale which is approximately 65K and use it to pay off loan mortgage debt.  

Any thoughts?  Would would you all do?

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  • San Diego, CA · Member since 2015 · 136 posts · 62 votes
    10y

    Gustavo - 

    What is the purchase price of the new property?  I can make an intro to a lender that can probably do the loan at a better rate.  I don't make any money on this. 

  • Investor · Pawleys Island, SC · Member since 2008 · 1k+ posts · 837 votes
    10y

    You said the cash flow for the replacement property with the financing you were offered will be $500/month.  What cash flow does the property that you will relinquish generate?

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