Buying a SFH and DST

[Anthony Fung]

I have a 1031 exchange worth $212,000, all cash. I currently have a SFH under contract at $189,900, that will provide $824.00 of net profit per month, identified as a replacement property. I also identified an Inland DST self-storage investment. Since my exchange is all cash, I planned to put 160k into the DST investment and 52k into the SFH and pay for the rest of house using a credit line I have. My justification for not going all cash, using the exchange funds on the SHF is it would not give me the benefit of writing off any interest on my taxes and I would have some boot. It also pushes me to use the line and start making money off the low-interest rate. My plan is to plow all my profits from the SFH to pay down the line and refi in 4.5 years, hopefully giving me decent equity. The concern I have is my rate fluctuates with the 30 day LIBOR rate. It is LIBOR + 1.1 spread. This line is only going to be good for another 4.5 years and more than likely will reset at a higher spread. Should I take a different approach or this a good strategy to maximize profit and the tax advantage?