Hello I have a situation: I have a paid-for investment property in the Los Angeles area worth ~800K. I would love to 1031 exchange it into a vacation property to use occasionally in the mountains near where I live. However, the current renter of the LA rental property is an assisted living. The AL company has been there renting my property for over 10 years and they are wonderful tenants. I approached the owner of the Assisted Living and (of course) he said he would be interested in seller financing. What I don't know is:
-What might be the advantages of seller financing? I suppose that I might pay less taxes? The Assisted Living owner threw out the idea that he could put like 200-300k down which is not too bad. Given the awesome rates right now, what would be a reasonable interest rate?
-Another potential advantage of the seller financing is that perhaps my vacation home that I would buy with it would not be subject to the rules of a like-kind exchange....(for those who are unaware, you can technically only stay in a rental property like 14 days unless you are actually working on the property..which...come on, I 'm not very handy...) So if we went with the 1031 exchange we would be a bit restricted with how much we could use the property
-I have tried to tap the equity in the LA rental property home but I was denied because it is operating as a business so I cannot get a HELOC
-FWIW, this LA rental property home was my husband's childhood home originally, so I only pay like $1000 in tax annually...so that's another thing to consider...maybe I should just keep this easy rental
-Any other suggestions? Any comments? Trying to be smart about this.
Thanks in advance!
