Financing Secondary Home Purchases. Who are you using?

[Cassidy Burns]

Hi BP,

Who are you using to finance your secondary home purchases ? 10% Down financing options that are not lending based on the borrower, but based on the asset? 

Would greatly appreciate any suggestions as I"m doing a 1031 exchange into a secondary home in the coming months (closing November 20th on sale).

Best,

[Dave Foster]

@Luke Carl, thanks for the shout out.  Both you and @Cassidy Burns are sort of correct - from the perspective of the 1031.  The requirement for a second home loan is usually only that it be xxx number of miles from your primary residence.  And that you agree to use it xxx number of weeks for personal use (usually 2).  Since 1031 doesn't care where the property is located and since some personal use is allowed.  It is perfectly fine from the 1031 perspective to use 2nd home financing for a vacation rental that will be part of a 1031.

Where the issue usually comes in is that many times lenders will not allow the down payment for a 2nd home loan to come from a 1031.  It is the lender that perceives that a property cannot be used both for investment and as a 2nd home.

And with that I"ll be the Mortgage Shop just got a whole new line of business :)