All Forum Posts by: David M Trapani

1. Save money for down payments;

2. Seller finance (joining investor groups or meet-ups in areas of interest helps); 

3. Pay cash for less expensive properties (as mentioned by Vicky L. may be OOS); 

4. Cash-out refinance;

5. Lease with option to buy;

6. Buying subject to existing seller mortgage;

7. BRRRR;

8. Use 1031 tax-free exchange;

9. “Walk” seller carry back note & 1031 into replacement properties;

10. Cold call (or have agent do so) expired listings and properties owned for many years as these may afford seller carry back opportunities;

11. Second home financing with 10% down;

12. FHA, USDA, VA (if veteran) or other smaller down payment loan programs;

13. Self-directed IRA;

14. HELOC on primary;

15. Family, friend or partner loans;

16. Hard money loans;

17. Commercial or credit union loans (often lighter qualifying standards);

18. Partnerships or syndication.

Not an exhaustive list. Keep day job & save money. Work on r/e a few hours every day. Talk to agents and other investors. Make calls & make offers. Keep on going.

Best wishes on your journey!

You should be able to do a 1031 tax-free exchange of one or more of your existing assets (equity). Of course, that would involve parting with an existing asset to acquire a new and different (hopefully superior) one, if you chose to go that route. Check with your CPA. 

No hard and fast rules on where to start. Agree with Conner. You may start with residential or commercial. Also, meeting with other successful investors or groups is a great idea. Not just for knowledge & learning, but also potential source of deals, seller carry back opportunities, etc. In my case started with one condo, added three more. 1031 condos into duplexes. When rent control came, 1031 into Airbnb's and OOS NNN commercial QSR's. Always keeping eyes & ears open. Political winds, regulations, trends, growing areas friendly to investors, etc. Always looking to improve the portfolio.

Condos can be great stepping stones. I try not to hold them for too long. Rules may change, dues may go up, HOA's tend to be drawn into litigation either with builder / developers or disgruntled homeowners or both. Unable to sell a condo to a conventional finance buyer when the complex in litigation - which means owners may be "stuck" absent a cash buyer. If you really like it check into cash-out refi. Get tax-free funds for reserves & funds for new acquisitions. Otherwise look into 1031 tax-free exchange. With that level of equity should be able to acquire (not necessarily in LA area - too expensive) a small multi-family property or move onto NNN or QSR's using commercial or credit Union financing. Best wishes & good luck!

Hi Steven,

Exactly. Yes, they can also be used with BRRRR. In that case, you'd keep the property which was originally financed with a seller carry back note (instead of selling it) and you would put new financing on that original property, with cash-out. In this process you would simultaneously walk the seller carry back note to acquire a new and different property. Timing works out fine when all parties & escrows work towards a common goal.

Hi Felicia,

Ask your agent to obtain the income & expense numbers from the listing agent / seller. Those are routinely provided by a seller who wishes to sell. 

To augment, check with your CPA - so long as you use the same LLC for your share of the new partnership & you otherwise qualify under 1031 - your new partner can take title any way they want as a co-owner - it seems it should work.

Why not use the same LLC? The others here are quite right - you must take title same on downleg as the upleg replacement property to qualify for tax-free treatment under 1031.

Hi Steven,

Yes, happy to.

If you own a property with a seller carry back & you've maximized cash flow and / or appreciation or you’re ready to get a new property...ask the seller if they will continue lending you those funds on your next property.

If yes, then open 2 escrows -  one for the property you’re selling & the other for the property your’e buying (you may also have a 1031 escrow if your doing an exchange).

Instruct the title company on the property being sold NOT to pay off the note holder. Instead they wire loan funds to replacement property escrow. 

Perfectly legal - blessed by CPA’s.

Instruct replacement property escrow to craft a new note and mortgage (same terms & conditions) to be the new first mortgage.

You now have the down payment (you may add more of your own cash if you like) for the new property tax free. 

Note holder also defers taxes.

It’s a win-win.

Highly effective. It’s possible  to build a long-standing relationship with seller (holder of the seller carry-back note). With the right lender, you may 1031 and “walk the note” to acquire different properties as you go & scale. A win-win for all parties.