HERE’S A QUICK SUMMARY OF THE 1031 EXCHANGE RULES:
✓ The entire 1031 Exchange process must be completed within 180 days
✓ Day 1 – Sell your property; proceeds are escrowed with a Qualified Intermediary (QI)
✓ Day 45 – Identify a property(s); you must notify your QI of the identified property(s)
✓ Day 180 – Close on the new property; you must close within 180 days after the first sale
✓ Maintain an equal or greater amount of equity in the replacement property
✓ Maintain an equal or greater amount of debt in the replacement property
Using this as a backdrop, here are three unique 1031 exchange investment strategies:
1031 EXCHANGE STRATEGY #1:
1031 EXCHANGE INTO LIKE-KIND PROPERTIES THAT YOU OWN AND MANAGE YOURSELF
In this 1031 exchange strategy, you can trade up and enter potentially higher-performing investment real estate assets, such as going from 4 to 8 units
or 16 to 32 units, or from a small office building into a self-storage facility or medical office building.
Potential Problems:
One of the problems with this strategy is that you're still going to have to operate and manage that property on your own and be dealing with the famous “Three Ts’” of being a landlord: Tenants, Toilets, and Trash. Of course, you could hire a property manager, but then you're going to have to manage that property manager. Investors that do a 1031 exchange into more commercial or multifamily assets on their own might be over-concentrating a large amount of their net worth into a single property in a single asset type or a single geographic location.
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