1031 QI and Portfolio lending recommendations

[Doug Dattawalker]

At some stage in 2021 (depending on my tenants) I will be looking to do a 1031 exchange into a property portfolio.

I will need a 1031 Qualified Intermediary and a Portfolio Lender to finance the deal. I have some questions and would appreciate some recommendations. 

• Should either my QI or my lender be located in the State(s) I will be investing in? I won't be investing in CA where my current property is. Are there pro's and cons in either? 
• Does my HELOC count towards my minimum loan in the new property (along with my current mortgage)?
• Can I do a 1031 from a single townhome (former primary residence that has been rented consistently for 5+ years) to a portfolio of SFR's or small multi's?
• I am assuming that a portfolio loan will be better and easier to manage than trying to secure individual financing for all properties at same time. Is this correct?

I'd really love any recommendations for 1031 QI's or portfolio lenders you have successfully worked with previously

Thanks in advance,

Doug

[Dave Foster]

@Doug Dattawalker It's a new world all the way around.  For years the location of your QI hasn't really mattered since 1031 is a federal statute, practiced the same in all states, and so many exchanges start in one state and end in another anyway. So focus on demonstrated breadth and depth of experience and referrals from folks who have used them.

And it's perfectly fine to go from any type of investment property to any other type of investment property.  It's the valuations that really matter.  And your CPA is going to be a key player with a portfolio purchase helping you make a strategic allocation of basis to the new properties.

What's new in this market is the rise of the truly "national" lender.  Not just the big non -portfolio lenders but portfolio lenders that like to operate nationally at a consumer level.  It's really opened the door to folks just like yourself to do what you're contemplating.  We're working on one right now where the sale for the 1031 is in one state and the portfolio/blanket loan is spread over properties in 3 states, and it's one lender.  Pretty amazing to watch this lender orchestrate everything.

The benefits of portfolio vs individual are difficult to make a blanket statement on.  Some individuals with credit on the edge can actually get better rates by doing a quick "ladder" of replacement properties.  Getting one loan settled and property performing and then the next and the next... (but within that pesky 180 days of the 1031).  Some will benefit from a hungry portfolio/blanket lender who likes the totality and feels comfortable with the current performance of the entirety.