Our Hard Money Lending Guidelines
| Interest Rates: | Starting @ 9.75% (interest only) |
| Closing Time: | 5 to 7 Days |
| Location: | Anywhere in California |
| Loan-To-Value : | Up to 75% LTV |
| Amounts: | $200K to $2M |
| Origination Fee: | 2 to 3 points, dependant on size and term |
| Lien Positions: | First Trust & Second Trust Deeds |
| Underwriting Fee: | $1500 |
| Loan Term: | 6 to 60 months (extensions available) |
Property Types
- Single-family & Multi-family Investment Properties
- Condominiums
- Retail Centers
- Office Buildings
- Industrial & Warehouse
- Hotels & Motels
- Healthcare & Assisted Living Facilities
- Special Purpose & Mixed Use
- Parking Garages & Lots
What is a 1031 Exchange?
Normally, when selling a property you will be taxed on the capital gains of the sale.
In a 1031 Exchange, an individual or corporation exchanges a "like-kind" investment property for another investment property of equal or greater value, (you can also exchange multiple properties).
When done under Section 1031 of the IRS tax code, you can defer paying any capital gains tax into the future.
This allows you to grow your investment essentially tax free.
This process can be repeated an infinite number of times, until you decide to realize your gains.
This popular and powerful investment tool should be in every real estate investor's toolbox.
About 1031 Exchange Timelines
Once a real estate investor has sold an investment property they have 45 days to inform a qualified exchange intermediary in writing about a particular property they plan to purchase.
Failure to inform the intermediary within the 45 day time frame results in an invalid exchange and the investor will not be able to reap the 1031 exchange tax benefit.
From the date the property is sold, a 180 day count down begins.
This 180 day timeline runs concurrently with the 45 day rule.
By the 180th day, the title of the replacement property must be completely transferred into the investor's possession.
Because of these timelines, a hard money loan is often used to bridge funding gaps and accelerate the purchase of the replacement investment property.
1031 Exchanges and Hard Money Loans
If you are running out of time we can provide you with a bridge loan to complete your transaction in order to be compliant within the 180 day deadline.
Often times the replacement property is of much greater value than the one being sold.
When an investor is exchanging into a more expensive property if they do not have the funds required they may need a short-term hard money loan to finalize the deal.
Once the 1031 exchange is completed and the investor has ownership of the new property they can then refinance into a more traditional lower cost bank loan.
Why Borrowers Choose Crescent Lenders
Rates as Low as 9.75%
75% LTV
No Minimum Income Requirement
No Upfront Fees
Direct Lender, Not a Broker
Speedy Approval & Funding Process
Minimal Documents Needed
Self-Employed or Foreign National
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1031 Exchange
Can a 1031 Exchange Be Extended?
A 1031 exchange cannot be extended under any circumstance or for any hardship. The only exception to this is in the case of a presidentially declared disaster.
Can I Do a 1031 Exchange With a House I Fix and Flipped?
This is a gray area, while 1031 exchanges are not to be used for the purchase of a property with the sole purpose of selling it for a profit.
If you were to buy a property, rent it out, make some improvements and then sell it a few months later it could qualify for a 1031.
By renting the apartment out and collecting income it shows the IRS that the property was used as an investment property.
Can a 1031 Exchange Be Used for Land?
Yes.
Can You Use a 1031 Exchange to Purchase a Primary Residence?
No. A primary residence cannot be used for like-kind exchange.
Can 1031 Exchange Be Used for Second Home?
No. A primary residence, secondary residence or vacation home do not qualify for like-kind exchange.
Can 1031 Exchange Be Used for Stocks?
1031 exchanges cannot be used for stocks, bonds, or notes.
Can You Still Do a 1031 Exchange After a Sale?
Yes, as long as you as the real estate investor do not touch any of the funds.
How Do I Avoid Taxes on a 1031 Exchange?
Yes, as long as you as the real estate investor do not touch any of the funds.
How Do I Avoid Taxes on a 1031 Exchange?
It's recommended to speak with a certified 1031 exchange specialist to ensure you qualify deferring your capital gains taxes.
How Many Times Can You Do a 1031 Exchange?
With the current IRS tax code there are no limitations to the number of 1031 exchanges an investor can perform.
Is a 1031 Exchange Only for Investment Property?
Yes, a 1031 exchange can only be used for investment properties. A 1031 exchange cannot be used on a primary residence, a secondary residence or a vacation home.
What Properties Qualify for a 1031 Exchange?
Both the relinquished property and the newly purchased property must meet certain IRS criteria to qualify for a 1031 Exchange. Here are some guidelines:
- Both properties must be held for use in a trade, business or for investment
- Properties that are used for personal use, like a primary residence, second home or vacation property do not qualify for like-kind exchange
- Properties must be similar types of properties, the IRS's definition for this is pretty broad, for example a multi-family property would be like-kind to a vacant land
- It is not possible to exchange like-kind property inside the United States for a like-kind property outside of the United States
- Real property cannot be exchange for personal property
When to File 1031 Exchange?
There are 2 time limits to a 1031 Exchange:
The 45 Day Limit
You have 45 days from the date you sell the relinquished property to identify potential replacement properties.
The IRS stipulates that the identification of these properties must be made in writing and be signed and delivered to a person involved in the exchange.
Either the seller of the replacement property or a qualified intermediary would qualify.
Your real estate agent, accountant or lawyer are not qualified intermediaries.
The 180 Day Limit
There is a 180 day limit to complete the exchange. At this time the second replacement property must be completely purchased and received and the exchange completed no later than 180 days after the sale of the relinquished property.
Who Can Do a 1031 Exchange?
Individuals, C corporations, S corporations, partnerships (general or limited), limited liability companies (LLCs), trusts and any other tax paying entity including owners of investment and business properties.
Who Holds 1031 Exchange Money?
A qualified intermediary otherwise known as an accommodator is a company or person that holds the funds in the transaction until they can be transferred to the seller of the like-kind exchange property.
How Much Are 1031 Fees?
Federal capital gains taxes can take between 20% and 40%. State capital gains taxes can be 0% if you live in states such as Texas or Washington.
Depending on what state you are in capital gains taxes can be between 20% and 40% and there are a few states with no capital gains tax.
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Los Angeles, California
90064