Selling land in the Bay Area, CA and using money for BRRRR.

[Moe Khan]

Hello BP Community,

I live in the Bay Area, CA and own a couple of rental properties. A couple of years back I bought a 0.5 acre land with cash for Multi-family construction. At this point in time, I am trying to figure out what should be my strategy with this land since the market is flooded with new properties. I need your help/advice on the following points.

• -My understanding is 1033 exchange is allowed on land. Am I right? Is there any specific issue I should be aware of? With 1033 exchange, can owner use the fund for BRRRR?
• -How to determine the appraisal value of the land? Is there any website which provides a estimate for land just like Zillow?
• -Since we are in the Buyer's market, is it possible to pull out some money just like HELOC (I know HELOC is only for primary residence)?

Thank you for your time,

[Sanat Bhandari]

@Moe Khan Some answers:

- Yes, according to IRC, raw land can be used for a 1031 exchange. Make sure you talk to your attorney and CPA about setting up a QI (Qualified Intermediary) account for funds from the sale and the formal filing procedures for the 45/180 day rule (45 days to identify the property and 180 days to close on it). As long as you're using the proceeds from the sale for improved/larger real estate, you should be able to use them

- Talk to a land broker to get an informal and the second most accurate valuation for that piece of land. The most accurate value would be determined by a formal appraisal  

- Depends on the lender. Some local banks/credit unions might be willing to give you a LOC against land but you would have to demonstrate solid financials for ATR (ability to repay) since raw land by itself doesn't generate any income (there's exceptions to this though)