Getting the most out of a 1031 Exchange Property

Oftentimes we get phone calls from real estate investors asking us about if we happen to have connections who would be interested in investing in a 1031 exchange property. The commercial market for real estate is quite aggressive now, and people owning lucrative properties are being contacted every now and then asking whether they are willing to sell their real estate possession. This is always great to know that people are making offers for your 1031 exchange property readily. But the question is: what you should do.

Some of us might indulge in structured sale, right away. However, there are others who have more market experience and may seek reverse exchanges to tie up good replacement properties, before the closing process comes to an end.

The Cost of Reverse Exchange

A reverse exchange allows you to acquire property before the deal for selling your property is sealed. There is also room for a parking entity to ensure investor access to necessary funds.

Though you can always park the property to be relinquished, in many cases it may cost you extra; costs like closing fees, duplicate state transfer taxes, title insurance, and stamps are the most typical.

Naturally, there are investors who reap the benefits of reverse exchanges. They tend to invest in a property or a set of property, but to no avail, as they are unsure about which relinquished property will suit them more. There should be a framework on 1031 exchange property time restrictions, while maintaining some leverage as a part of the deal closing process; the reason is none other than the limitation in exchange period, which some sellers try to take advantage of.

The option to combine reverse exchange with construction exchanges or “build to suit” is also open; and this precisely applies before the beginning of construction and the acquisition of the target property.

About the Author

Dwaine L. Clarke is the Founder and President of GCT Net Lease. GCT Net Lease is an investment real estate services firm exclusively focusing on Single and Mult-Tenant Net Lease Properties. The firm provides a full range of brokerage and advisory services nationwide to High Net worth Investors, Developers, REITs and Institutional Investment Funds. GCT Net Lease is headquartered in Windsor Connecticut. Dwaine is also a nationally recognized speaker and consultant. He is also the author of three best selling commercial real estate investing books. Mr. Clarke’s experience branches through close to over a decade of working with and for some of the nation’s top investors to purchase, underwrite, develop and manage millions of dollars in commercial investment real estate. For his case, he has not only assisted these investors, but also became a student of theirs. Through careful analysis he started to understand what these investment experts were doing, using top strategies to buy, manage and sell their investment properties for maximum profit. He especially took note of how these investors were leveraging their time and how they made their decisions without interfering with their personal or business lives. Mr. Clarke is also active in investing and creating real estate partnerships, providing a vehicle for high net-worth individuals to own income producing real estate.

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