1031 Exchange Deal From a Condo to a SHF 3/2

[Andrew R.]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $130,000
Cash invested: $70,000

SFH bungalow that was purchased with a 1031 exchange. I sold my condo that had cash flow, however, due to neighbors whose utilities were connected to mine, the cap-ex started to affect the bottom line. I decided to sell and purchase the SFH at a discounted price since I was paying all cash and I didn't have HOA dues.

What made you interested in investing in this type of deal?

No HOA dues and tied utilities that began to give me repair problems. Also, I wanted to exit out of the condo properties.

How did you find this deal and how did you negotiate it?

The current owner was renting out the properties and was ready to retire and didn't want to continue the upkeep of managing renters.

How did you finance this deal?

1031 exchange

How did you add value to the deal?

This coming year I'll be going up on the rent closer to market value (still a little under) and refinancing after the seasoning period is done.

What was the outcome?

About $300 cash flow and will refi soon. This property has about $150,000 in equity already.

Lessons learned? Challenges?

Have a property ready if you can before you sell out into the 1031 exchange. I already had one lined up but I can see how if you start getting close to the 45 day of identifying the property and 180 days of closing, it can become very stressful.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I used Lu Ann Blough from Exchange Resource Group (erg1031.com), they were a pleasure to work with.