Best way to finance furnishings when using 1031 exchange

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Best way to finance furnishings when using 1031 exchange

Charlotte, NC · Member since 2022 · 3 posts · 0 votes

I am using a 1031 exchange to purchase 2 STR's and from what research I have found is I am not allowed to use those funds for furnishing a property. What is the best way to finance the purchase of furnishings. I have some cash to do it but that will run me dry of my cash reserves which I would like to keep on hand for any unforeseen situations. Also, I know the cost will vary based on style and location but what is a good estimate for a 4 bedroom 2500 sqft property on cost to furnish properly. I have read anywhere from 10-15k all the way to 40-50k. Any input would be appreciated.

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

Use a CC or use free financing from some place like rooms to go.

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Steven Foster Wilson
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
4y
Quote from @John Rankin:

I am using a 1031 exchange to purchase 2 STR's and from what research I have found is I am not allowed to use those funds for furnishing a property. What is the best way to finance the purchase of furnishings. I have some cash to do it but that will run me dry of my cash reserves which I would like to keep on hand for any unforeseen situations. Also, I know the cost will vary based on style and location but what is a good estimate for a 4 bedroom 2500 sqft property on cost to furnish properly. I have read anywhere from 10-15k all the way to 40-50k. Any input would be appreciated.
If you do not have the money to potentially buy all the furnishings then why not rent them? Have you checked what rents are for that area? Maybe you just do one as a long term rental until you get enough $$$ that you can do the furnishings in the other? I have used a staging person and often they are willing to sell their things too. Maybe you could find someone on FB that would be willing to sell you their staging furnishings.
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Dorothy Bland
New to Real Estate · Tampa, FL · Member since 2022 · 20 posts · 11 votes
4y
Can you take out a small HELOC on your own home or perhaps a line of credit against an investment account? Some investment banks are offering that now.
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Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
4y
I furnish a 3 bedroom place for under $1000. That's the washer, dryer, fridge, stove, 3 bedroom sets and living room furniture. Estate auctions.
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
4y
Use a CC or use free financing from some place like rooms to go.
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Kerry BairdPro Member
Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
4y
I have been gathering business credit cards in the name of my entities, and use those for furniture and the consumables.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
4y
@John Rankin
Unfortunately proceeds from a 1031 exchange can only be used to purchase actual real estate, so furnishing your new property would not be allowable using 1031 funds.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
4y
Quote from @John Rankin:

I am using a 1031 exchange to purchase 2 STR's and from what research I have found is I am not allowed to use those funds for furnishing a property. What is the best way to finance the purchase of furnishings. I have some cash to do it but that will run me dry of my cash reserves which I would like to keep on hand for any unforeseen situations. Also, I know the cost will vary based on style and location but what is a good estimate for a 4 bedroom 2500 sqft property on cost to furnish properly. I have read anywhere from 10-15k all the way to 40-50k. Any input would be appreciated.

Start off with minimal furnishings purchased at garage sales or on facebook classifieds. You can furnish a 3bed/2bath for well under $10,000. Then save up the money and upgrade as your budget allows.
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Percy N.
Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 905 votes
4y
@John Rankin, there are several "hacks" to furnish a rental.
You can also rent or lease the furniture which if you go to the right place is not that expensive and may make sense, especially if the premium for furnished units is significant.
You can also change the furniture every 3-6 months and most places have delivery and pickup included in their prices.
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