All Forum Posts by: Adam Odom

I'm actually a banker and had a trust attorney stump me yesterday. He asked why banks do not lend anymore to irrevocable trusts and I knew the answer was "no" (at least at the ones I've worked for) but didn't really know the "why." My underwriter gave the answer that technically the trust is the owner of the collateral but the trustee is who we would have to go after therefore it's basically an unsecured loan so we stay away. My question is - if that's true why can you potentially do a revocable trust loan? Wouldn't that be the same issue? Or is it just banks have gotten more conservative, possibly because this went to court and someone lost so all steer clear of them now.

@Dave Foster Ok I think I'll just have to take it as is for now. Thanks for the help - very good information! I'll connect with you in the future because while we're mostly in the "buying" phase we did sell one rental already this year but just used the proceeds to pay off two other loans. I want to start exchanging in the future on others we sell.

@Dave Foster Great! I figured there was some sort of work around. So basically holding the note in the exchange would be sufficient? I know you mentioned 180 days but that's only if I didn't have the note in the exchange too correct? Would the payments he makes monthly until the lump sum have to go into the exchange as well? I hope that makes sense.

I am preparing a contract to sell a property right now and we are carrying the note. The buyer will more than likely do the owner financing for a couple of years then either pay off or finance into a traditional loan. My question is - can I still use that lump sum payment at that point down the line to do a 1031 exchange or does it have to be at the time of the purchase transaction? Secondary question to that - this is a commercial property but I mostly buy residential - if I was able to do the exchange could I buy a residential property since it's still going to be "investment" property or would it have to be another commercial property to satisfy the like kind requirement?

I'm no expert so I'll defer to someone else if incorrect but you wouldn't actually "own" the property for a year during their redemption period so you couldn't get a loan on it since you won't own the property yet. You won't get clear title until they pass the 12 months to redeem.