Hi everyone. A precursor: thanks for reading this. It's a tad complicated.
My situation: I have the opportunity to do a 1031 exchange which could bring me FI, but will require some serious leverage (cash out + a small biz loan) to get the deal done. Is it worth it?
The details:
I have a rental property worth about $440K. ($180K left on the mortgage.)
The house generates about $2.5/month (gross). It is on Airbnb. (Net is significantly less.)
The property I'm trying to get: $555K.
$5K/month on Airbnb. (The houses are in different states. The new one close to where I live.)
I make decent money at my day job (not real estate related), but I am self-employed and thus taxes make me look like I make very little. Ergo can't get a traditional mortgage. They just laugh at me when I go in there. :)
I can scrape together enough cash to pay off the mortgage ($180K) and pay for the balance ($555K-$440K AKA new house - existing house) via taking $80K out of my Roth (no penalty), a $50K loan from my 401K, and taking the remainder as a small business loan.
It's a lot. And would leave me rather cash poor. And stressed. And hoping Airbnb doesn't get shut down in that town. --no threat that I've heard of this happening, but just sayin, people!
The cherry: This new house has been on Airbnb since 2012 so is has "regulars" who stay every year.
Post all of this, I would have $170 left in retirement, no cash to speak of, and $120K of equity in a different rental property I own. And maybe $40K I could access via credit cards. Plus my day job.
I would achieve FI after I paid off the business loan (5 years). Less if I made bigger payments.
Would you do it?