Acquiring multiple properties with 1031 exchange and mortgage

[Franklin Abel]

I am trying to figure out how to structure a mortgage and with whom if I sell a multifam building and acquire several units with equal or more value and debt. Are there particular lenders that are more advantageous than others? Selling Chicago. Buying in southern Florida. 

[Dave Foster]

@Franklin Abel, The 1031 part of the equation is not going to limit you.  Unless you've got all of your replacements lined up at one time I suspect you'll end up using individual loans for each replacement.

It could certainly be worth exploring a lender that would write a portfolio loan and let you add properties as you go.  My guess is that unless what you're selling is very substantial you'll probably be paying for this "courtesy" from the lender.

The 1031 doesn't care where you get money.  And it doesn't matter how you allocate your proceeds.  This could actually simplify things for you.  You could identify a number of properties that you purchase in cash to complete your 1031 while buying just enough with leverage to satisfy the overall reinvestment requirements

Once this is done your 1031 is complete.  And if you want to you can then refi the cash owned properties and use the proceeds from the refi to purchase new properties outside the 1031.  This really doesn't change things from the lending side.  But it lets you purchase the fewest properties possible while under the time constraints of the 1031.  And it frees you up to wait until you find each best new deal for any other acquisitions.

Most folks will Simply allocate the proceeds from the sale to be used as down payments on multiple loans for multiple properties. But given the fed lending restrictions you may be into investment grade loans anyway.  In that case a friendly lender can at least streamline the underwriting process so you're not starting over with ever purchase.