Newbie investing, duplex, 1031 exchange, LLC

[Joseph Tjader]

Hello BP Community

This is a very newbie post which will be long so please bear with me.

I am 29 and recently (last year) bought a 3/2 near a military base,. It was a turn key and I figured I would rent it out to military families down the road. I knew very little about how to run numbers and to use a property as its best intended use. I used the VA loan but also put down 14% of the purchase price. I bought into a 3% interest rate, 30 yr fixed. The house has a large garage, fenced yard, AC and so on. My current payment is $859 and would rent for $1200-$1250. Would make a great rental for a family. I am not married, no kids, no pets, 800 credit score. I am currently the only person living in the house. I had a renter (for a month) and he managed to piss on my carpet???, clog both of my sinks, and took paint off of a wall in his bedroom. I "evicted" him the next day. Personally, I hate to live with other people.

I am looking currently for a duplex to buy, live in one side, rent the other. My current financial situation is 10k between savings and checking, 40k in stocks/bonds, and 20k in a Roth IRA. I have no debt other than the current mortgage, vehicle paid off. I am wondering if there's a way to buy a duplex without having to put down 20%. Reason is, I don't want to pull my investments. I came across a property I was interested in and was suggested a FHA 203(k) loan. I learned that all the work has to be done by licensed contractors (is that correct)? If I were to do this on the property I am interested in, I don't want to get into a cash crunch as there are numerous repairs to make. I am also concerned that since I would prefer to do the work myself, that down the road I might get sued if something went wrong. This leads me to my next question.

If I understand it right, to qualify for a 1031 exchange, the property must have been held in the same vehicle as the new property, i.e. The house I currently live in was purchased by myself, not in an LLC. My banker said that I would have to live in it for at least a year before I could move it over to an LLC. Given that the house was not purchased in an LLC it would not me able to use a 1031 to fund the new property. Also, I heard that banks require a 30% down payment and the LLC must have been in operation for at least 3 years and show a history of performance for a new property to have to be bought through the bank (is that correct)?

Here in lies the dilemma, not sure if you guys would call it that though. I want to get out of my current house (just doesn't make much sense) and buy another property, duplex, triplex etc. I am not sure if I should set up the LLC, get an attorney, an accountant, etc only to be turned down by every bank. I like my house, I am happy with the 3% rate, and can afford the payments no problem by myself.

Also, on a side note, I plan on becoming a real estate agent with Keller Williams in the next few months.  Should I wait until that is already the case and go from there? Thank you so much for reading this post in its entirety. 

I love BP and find myself learning so much the I stay up this late in the day to learn about RE investing.  Is there any advice more seasoned investors would be able to give to a VERY NEWBIE INVESTOR?

Thanks again, Joe