Re: Bridge 2nd MTG for down pmt on new rehab? - Posted by John Corey
Posted by John Corey on April 15, 2006 at 08:31:04:
- It is one way of financing. It is likely that not a lot of other lenders will work with a property that has not seasoned much. If you are going to sell it the costs of a new loan on the 1st does not make that much sense. Also if the property is being put on the market many lenders will not make the loan if it is listed.
You also could benefit from doing a few deals with the bank. Hence taking up their offer might have benefits beyond this deal.
- The 1031 question needs attention.
It is unlikely you can do a 1031 is you do not quickly connect with a facilitator who will manage the process. You need to be careful about the sale, the purchase and how the details are handled or the 1031 will be null.
It does not matter what you are selling and what you are buying as long as it is RE. It could be a city office building for a residence and then a lot and then a shopping mall. What matters are the numbers (value, equity, debt) and if there was any cash received.
More important is the fact that the property you expect to sell you did not hold for investment purposes. A simple test is it was never a rental. You purchased it for a short term hold (buy, fix, resell). Hence the IRS generally excludes all such deals from the 1031 process. They see such deals as property held for inventory (to resell) and not as a long term investment. The fine details might be slightly different. The key is you are unlikely to be able to do a 1031.