1031 into a BRRRR deal

[Ryan Cleary]

Heres the scenario:

Selling our first rental property, currently in contract

Plan on doing a 1031

Would like to purchase a single family with hard money, perform a rehab, rent it out, and refinance our money out.

Is this possible with a 1031?

[Benjamin Aaker]

You should be able to 1031 subject to its rules. Find an expert to ask your specific questions. I'll loop in @Dave Foster and perhaps he can help you. 

[Ashish Acharya]

Yes, it's possible to use a 1031 exchange to roll the proceeds from selling your first rental property into a BRRRR (Buy, Rehab, Rent, Refinance, Repeat) deal, but there are a few important things to consider. When you do a 1031 exchange, the property you purchase must be a like-kind investment, meaning you intend to hold it as a rental. You can buy the new property with hard money and perform the rehab, but all the funds used for the purchase and rehab need to come from the 1031 exchange and the loan, not your personal funds. The key is that the property must be rented out before you refinance to ensure it meets the IRS requirements for a like-kind exchange. After renting it for a while, you can then refinance to pull your money out. It's a bit complex, so working with a 1031 exchange expert and a tax advisor is crucial to make sure everything is done correctly.

[Ashish Acharya]

Yes, it's possible to use a 1031 exchange to roll the proceeds from selling your first rental property into a BRRRR (Buy, Rehab, Rent, Refinance, Repeat) deal, but there are a few important things to consider. When you do a 1031 exchange, the property you purchase must be a like-kind investment, meaning you intend to hold it as a rental. You can buy the new property with hard money and perform the rehab, but all the funds used for the purchase and rehab need to come from the 1031 exchange and the loan, not your personal funds. The key is that the property must be rented out before you refinance to ensure it meets the IRS requirements for a like-kind exchange. After renting it for a while, you can then refinance to pull your money out. It's a bit complex, so working with a 1031 exchange expert and a tax advisor is crucial to make sure everything is done correctly.