1031 and Construction Loan

[Amy Zemser]

Hello Investors, 

Forgive me if this has been asked on the forum before. I have a rental I can sell for 400k in this wild market. I picked it up for 250 12 years ago. I'd like to use the 1031 to buy a rental an hour away where I know I can cash flow four times the amount for a like-kind house. Trouble is, there is no such house for 400k in this hour-away area (obviously). Assuming I walk away with 200k cash in hand, can I purchase a fixer-upper for 200k and take a construction loan for the remaining 200k to land at a like-kind house, thus avoiding the gains? I realize I have only 180 days to complete a renovation; thus, given this, how would a rehab be possible? 

It takes a long time to put a loan through in this market. Sometimes 8 weeks. But assuming I bought the ugly house for 200k and closed, is this a remotely possible scenario? 

Thanks! 

 

[Amy Zemser]

@Dave Foster  -- Thank you for the response. Are you an intermediary who can do this sort of thing? Here's another question: if I purchase a new property for 150k, and put 50k into it as a repair, but the end yield is a house that values at 400k on the market, am I satisfying the rules of an exchange? Or must I spend the entirety of my cash profit from the first sale?