1031 Purchases & Possible Works Arounds

[Riley Jordan]

Recently, I purchased a couple properties in Idaho Falls, ID using 1031 funds and I am planning to short term rent those units. I have more money that I need to spend to avoid capital gains taxes and would like to purchase multiple units, only putting down 20-25%. The only problem is, my debt to income ratio is now skewed. My lender wants to see rental leases for proof of income but since I'm doing short term rentals, I don't have leases. So it seems to me that I'm either going to have to pay cash (and could probably only purchase 1 more unit now and refi that money out in 1 year) or figure out a way to partner with someone (and I could buy several units now).  The unit I sold to get the 1031 funds was purchased before I was married and I never thought to add my wife to the title.  So, my understanding is that my name is the only one that can be on the title of the units that I'm now purchasing with 1031 funds.  Is that true?  If so, is there a work around?  Awhile back I was listening to a BP podcast (can't remember who the guest was or the title of the podcast) and they mentioned doing a 50-50 split in the contract where each party only owns 50% instead of both parties owning the entire property.  It's been awhile and my memory is a bit foggy about the details of that precess but could that be a 1031 work around?  Other thoughts on how to get around my debt to income ratio with a 1031 E? @Dave Foster, thoughts? 

Thanks a ton, 

Riley 

[Eric Mitchell]

Are you looking to purchase this next property with the leftover 1031 money? Did you put it down as a intended property to purchase during the first timeframe? Just double check that you can purchase it before you go through the trouble.