Planning to invest in multifamily unit...

[Sathiya Deva]

I live in Thousand Oaks California. I have one single family rental unit(zillow estimate $650000). I have a equity of $250,000. I don't have positive cash flow in this property. I have one rental condo unit in Simi Valley with position cash flow of $150/month. The property is worth $175000 (Equity - $60,000). I am planning sell my Single family home and invest in Phoenix, AZ for multi family unit. Please suggest how do I need plan out to build my rental empire 

[Dave Foster]

@Sathiya Deva, what @Bob E. is saying sounds like sage advice but doesn't have to derail your ability to complete your transition tax free and tax deferred. 

 In the event you need to go that direction in order to secure just the right PHX property you may want to think about a reverse exchange.  Since the statutory order of a 1031 requires that you sell before you buy, a reverse exchange allows you to control before you sell and then buy what you have under control after you sell.  Your 1031 intermediary will create a holding company (an exchange accommodating title holder EAT) to take title to the property you want to buy and secure it for you and hold it for you with guarantees to you and financing provided by you.  It has some very stringent rules that must be adhered and it is more expensive than a straight exchange but it can be the answer to getting a quality property in a heated market.  

The key to the financing is that the loan must be made to the EAT non-recourse but secured by you.  A portfolio lender who understands 1031 reverse exchanges and your market is generally who you are looking for.