What do you think of my 1031 plan?

[Teague Anderson]

Hello,

I have an idea I want to run by you all.  Someone's probably already done it, but I felt clever for thinking it up... if it actually works.

I have a condo in Boulder, Colorado that I bought in 2013.  It's appreciated handsomely, and I'd like to cash it out to turn it into two or three rentals.  Naturally, I want to use a 1031 exchange to avoid capital gains.  I think it's going to be a challenge to find one good deal within the 45 day naming period, let alone two or three, so here is my idea:

If I'm only able to find one good deal during the time limit, I will buy that property entirely with cash.  I won't have enough money myself to pay cash, but I can take out a short term loan from the bank of Mom to make up the difference.  I'll close on the property, fix it up, get it rented and seasoned, and then do a cash out refinance.  By this process, I will have sold a property, bought another, paid my mom back, have cash in hand without paying capital gains, and have as much time as I'd like to search for the other deals.

I've checked with a 1031 exchanger and my loan guy, and neither of them had any red flags.  I'll be doing some direct marketing to try to drum up good deals, but I feel like this is a good way to hedge my bets.

What do you all think?

:-) Teague