If they are, then the enemy method works.

Or you can save your cash and use only the 1031 proceeds remaining as down payments with new loans.Either way you'll still have the option after your 1031 starts.

You might also have rodent control and termite protection.For due diligence, make sure you get a two-year payment history for all tenants.

Request for maintenance records and tenant payment history.

I agree with the posts above, save money and make yourself someone people want to lend to.  35% equity with no money in your pocket isn't a good deal for a lender.  35% equity on top of a 25% down payment with 6 mo of reserves in your pocket is probably a much better deal for a lender. 

You only need a place to track tenant information, payment history, maintenance, etc.

2) Using our HELOC to supplement the down payment.. we do have some bonus payments coming at the end of the year we could pay it down plus the tax savings could help us pay it off, so maybe it would be worth it in the end? 

@Sequoiah BriseñoCalifornia multifamily sale and 1031 exchange purchases mandate landlords or property owners to issue 1099s for payments of $600 or more to a sole proprietor, LLC, or partnership, and request a W-9 from each vendor by January 31.Good Luck!

The BRRRR method is tricky here as we've had some of the highest appreciation in the US over the last 5 years.

@Noah Schulz what does the lease state about payment and what period the payments cover?