1031 Ph.D. Fund Replacement w/ Loan/Cash/Pro Rata Land Trust/RLQ2

[Keith Thompson]

Ph.D. Level Scenario?

I’m about to close on the sale of a property as a 1031 Relinquished (RLN) property (several are on the market - i.e. RLN1, RLN2, ..3, ..4…, all are free & clear) and am actively searching for Replacement (RPL) property/ies already.

The problem is of course timing and funding mechanism(s).

I am confident I can identify RPL1 within 45 days but RPL1 will be more costly than RLN1 net + rehab$, so I will have to find a way to make up the difference. I hope to combine proceeds from another RLN(2 or 3) prior to expiration of 180days, but can’t rely on this and so, I need some options*.

My preference would be to get a 1st Mtg loan on RPL1 for balance of purchase plus remodeling expenses, then to pay that loan off/down with proceeds from RLN2... I can easily get a loan and have liquidity, or could do something else that accomplishes the goal.

Example of timing & funds:

RLN1 Settlement Sells @ $150K, Net @ $125K & Clock Starts

Identify RPL1 <45days @ $200K, with settlement pushed 30-45+days out, plus $30K rehab

EMD with personal funds with "Return of earnest money" @ settlement

    (Thanks @Dave Foster for 1031 Exchange reimbursement of previously paid EMD/DD)

If RLN2 sells within 45days, then ID the same RPL1, otherwise get a Loan or other strategy*

When RLN2, 3… settles, use the proceeds to pay off RPL1 loan.

Other timing considerations?

* Another, perhaps far-out option, & borrowing from the “Using a 1031 exchange to fund a buyout” thread:

Take title for RPL1 (potentially & RPL2…) possibly using a Land Trust along with non-prohibited entity and with proportional ownership, then acquire pro rata interest as RLNs liquidate.

Thoughts?  

There is a lot of brain-power and experience here, can we flesh out some strategies?

@Bill Brandt

@Bill Exeter

@Alex Olson

@Justin Summers

@LeAnn Riley

@Chelsea Anderson

@Mathew Owens

Best to all,

Keith