Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
1031 Exchanges
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 3 years ago on . Most recent reply

User Stats

8
Posts
2
Votes
Mary Gold
  • los angeles, ca
2
Votes |
8
Posts

1031 or cash out refi?

Mary Gold
  • los angeles, ca
Posted

Hi bought a personal residence condo in 2009 for 480K in Southern California. The area has improved. It's been rented out the past 7 years, minus a 9 month personal-residence stint where I refi'd to a great rate (3.62%).  I only owe 270K now. The condo should be worth about 620K now and I would like to buy a place to live in (immediately or eventually). So I am wondering: 1-should I cash out refi and take a higher interest rate to have cash in hand for another down payment? OR 2-Should I sell the property, take the $ and buy another place as a 1031 exchange and then move into it in a few years? 

I'm not in a rush to buy but do want to maximize the equity and get something nice I would want to live in myself eventually. I don't want to go back to that condo because the neighborhood is nice but not close to my industry.

What is the best move, long-term? 

Most Popular Reply

User Stats

8,980
Posts
9,353
Votes
Dave Foster
#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
9,353
Votes |
8,980
Posts
Dave Foster
#1 1031 Exchanges Contributor
  • Qualified Intermediary for 1031 Exchanges
  • St. Petersburg, FL
Replied

@Alexander Zurn, I think @Mary Gold, has the right idea.  "Like kind" for 1031 purposes is any kind of investment real estate for any other kind of investment real estate.  What she would be doing is selling an investment property and buying an investment property and then later in a couple of years possibly converting that property into her primary residence.  Nothing wrong with that.  There's even a 2 year safe harbor from the IRS with some other stipulations.

The only thing I can think of that might push the balance either way is that if you 1031 you'll have to be getting investment financing on the new property which might not be as advantageous as you would like.  And then after two years you're stuck either with a higher interest rate than you want or a second refinance into owner occupied.

On the other hand though if you refi  you have access to less cash.  You can get an owner occupied interest rate from the get go.  You don't have to use it as investment for 2 years before moving in.  But... you're still stuck with the investment property and must decide whether to later sell and take the profit taxable.  Or do a 1031 into another investment property which might stretch you if your plan doesn't include holding investment real estate for life.

  • Dave Foster
business profile image
The 1031 Investor
5.0 stars
92 Reviews

Loading replies...