Cash-out Refi on Prop. A Before 1031 Exchanging Properties B,C,D?

[Philip Potosnak]

Hey BP! My wife @Christina Potosnak and I are in the early stages of performing a 1031 exchange on three SFRs (Properties B,C,D). We have a fourth SFR (Property A) that is paid off that we could tap equity from ~$120k by doing a cash out refi. Would it be better to cash out refi Property A before the closing of the first relinquished Property B in our 1031 exchange? Or after? I was thinking it would be advantageous to add the $120k from the cash out refi to add funds to our 1031 replacement property. The credit union at my employer also offers home equity loans equal to the equity we currently have on our primary home. This could raise an additional ~$90k to go towards 1031 replacement property.

[Dave Foster]

@Philip Potosnak a good plan.  One more avenue to pursue would be a reverse exchange using the equity as down payment and portfolio financing for the remainder.  Your QI takes title to the building or park and holds it while your other properties sell.  this can really help mitigate the risk from the tight timelines of three overlapping 1031 exchanges.  It also allows you up to 180 days of double dipping appreciation, cash flow, and depreciation.