Great deal, can't figure out the financing

[James Theron Erwin III]

I have posted before about this deal in the 1031 exchange forum before and I believe that is not what I need... You always hear that if you find a good deal, you will find the money... Well, I need some help finding the money or more specifically which is the best route for getting the money. Details of the deal- Outside of Kingman AZ, I own 40 acres with a funky 1000sf house through which I have an owner carry back mortgage for 140k after putting 20k down. I have done some improvements to the land (about $10000 in fencing). I have a friend who owns a 9 year old 1800sf single family home in a subdivision very near my primary residence in Prescott Valley AZ (the kingman property is about 110 miles away). I have offered to trade her straight up as she has been looking for property near mine in Kingman and I have been searching for a good deal on a local rental in Prescott valley. She owns her home outright with %100 equity and it is worth approximately 220-240k. I believe my property is worth somewhere around 180k with my 140k mortgage and hers is worth 220k with no mortgage. So, essentially if I can figure this out, I would end up with a 140k mortgage with 80k equity in the other home. I thought it would be a no-brainer to get this financed or figured out but I am having issues... Originally, I thought maybe a 1031 exchange which I was told would make things too complicated and possibly not qualify anyway. I have tried 2 different traditional mortgage guys who have since said they can't make it pencil. So, I'm beginning to research hard money and private money to try to make this deal go through. Does anyone have any suggestions? Also, if my owner carry back holder would be amicable, would it be possible to switch his first trust deed to the other property? He would essentially get my earned equity if he foreclosed and the house in Prescott valley is way more liquid to sell again. Thanks for reading and please feel free to ask any questions about the details of the deal that may be needed to give proper advice.

[Jim OConnell]

I am a bit confused by this statement "I would end up with a 140k mortgage with 80k equity in the other home" it sounds like you want to carry back your carry back to her. Which would be beneficial to you but would leave her out to dry because technically she would not own a home the paper holder would.

Creative option that require a huge amount of trust from your friend-

Do it on a handshake

You could use hard money to buy out your house 

It will cost you points and a percentage but they usually only pay 80% of ARV that is why it barely pencils out. To pay off the carry back. Then she could sell you her house for $1 and fees.

You acquire the home finance it and pay off the hard money and sell her your house for $1

Pros: 

you moved up in equity-hard $ costs and fees on a home, and you both get what you want.

Cons: 

The banks and hard money lenders utilize comps for value property so your 1000 sq/ft and land probably is not worth as much with financing. That is why it was sold to you with a owner carry loan.

Hard money costs, fees, etc can quickly add up you must pencil in hold time for the loan and if this is actually going to work YOU HAVE TO KNOW THE VALUES OF THE HOMES exactly which if people are telling you it does not pencil out sounds like your numbers are off.

 or 

Or vice versa you use hard money to buy her home for a reduced amount she then uses the money from the sale to buy out your place and you finance the new home and pay off the hard money. 

Again hard money is expensive so know the values of the homes and calculate points fees and holding costs subtract that from the ARV of her home and that will be your equity.