All Forum Posts by: Sheri L.

Thanks for the helpful info, Dave.  It's good to know what a lender needs to understand in order to get comfortable with a reverse exchange as well as the other mechanics of a reverse exchange.

Good to know.  Two 1031 intermediaries told us that the lender for the replacement property can be one of the biggest issues in being able to do a reverse 1031.  

It'd be great to get the name of your intermediary because perhaps they know how to navigate it better.  I'll message you.  Thanks. 

Thanks, Kevin.  

My understanding is that many lenders (including Fannie, Freddie and CMBS) unfortunately won't agree to a reverse 1031 exchange. I believe this is because the loan for the replacement property initially has to be made to the qualified intermediary's entity until the relinquished property is sold (which many lenders don't like even if you give them a personal guaranty). There may be other reasons, as well.

Our 1031 intermediary told us it would be preferable to work with a lender that already has experience with reverse 1031 exchanges.  They suggested we reach out to local banks and credit unions.

But to your point, our intermediary did say they're happy to talk with the underwriter to try to get them comfortable with a reverse 1031.

I'm looking to buy a mid-size multifamily property (10-30 units) in the Atlanta metro and subsequently sell a single family rental property in Washington, DC.

I like the reverse 1031 exchange option because I wouldn't be under the gun to find the replacement building.

But so far I haven't found any lenders who are familiar with reverse 1031s. I've called local banks and credit unions in the Atlanta MSA.

Has anyone completed a reverse 1031 where you were using financing (as opposed to buying the replacement property all cash)?

Thanks!

We do think we could raise the rent by at least $200/month, which would help somewhat with cash flow.

Sounds like a great project, Dan.  Thanks for the info about the market.

The property is zoned MU-3A, but the block is made up of all rowhouses.

Thanks, Mark and Russell.  It does fall in the area you mentioned, Russell.  

We have well into the six figures tied up in the property, which is part of the reason we've debated whether to sell now given our cash on cash return is very low.  It sounds like the submarket has room to run, though.  
 

Thanks, Mike.  Good to know.

We renovated the house.  We renovated it to the level of more of a B+ class rental (with 5 bedrooms and 2 bathrooms) as opposed to a complete gut job.

Hi all,

My husband and I own a rowhouse in NoMa (between H Street NE and Union Market). It's appreciated quite a bit since we bought it in 2017. 

We currently have renters in the property, and we end up cashflowing only a very small amount after all of our expenses are paid.

Our renters' lease is up at the end of March, and we're trying to decide whether to continue to rent the property out or sell it now and redeploy the capital in properties elsewhere that cash flow better.   

We now live in CA, so we don't have a great grasp of the current DC market.  

We'd greatly appreciate any insight into where you think the DC market currently is at and whether it makes sense to continue to hold the property in hopes of further appreciation.

Thank you!

Sheri

The Westside of Los Angeles (Venice, Santa Monica, etc.) definitely is turning.  It started in late summer 2018 and has slowly turned downward more since then.  Listings are sitting on the market longer and many end up selling below list price.  There also has been a dramatic reduction in the number of bidding wars (https://themortgagereports.com/47875/home-bidding-wars-down).  

It's a very high-priced area that may be indicative of where things are heading more broadly.  It's just hard to tell if we are headed for a dramatic downward trajectory or a much more modest correction.