Cash vs LOC acquisition strategies

[Joe Surber]

I am fairly new to Real Estate investing. When our daughter started college instead of renting, we found a good deal on a condo and decided to purchase it. We rented out the second bedroom and it worked perfectly while she was in college. Once the condo was paid off we took out a line of credit secured by the condo. We used this line of credit to buy several single family homes in need of help. We also used the LOC for the rehab, and then finished the BRRRR strategy.

Because of HOA fees, we are going to sell the condo. My initial thought was that we would use a 1031 exchange and buy a like property. I had a thought however, about instead of putting the cash into another property.... using it as a seed money. This way we could pay cash for the purchase and rehab, then finance. My thought is that this will give us an advantage with REOs and making deals happen quickly. This could also serve as an additional safety margin if ever needed. I realize there are obvious tax implications. Thoughts?

[Joe Surber]

@Dave Foster Thank you for your time and expertise! That makes perfect sense. I have never heard of a reverse exchange. 

Thanks again!

Joe