| |
| |
|
Real Estate Information |
|
|
3 Mistakes to Absolutely Avoid in a 1031/TIC Exchange
We've all made bad decisions in the past. Don't you just hate to hear "I told you so" from your friends and family? Or, maybe you catch yourself saying "If only I'd have...?" Personally, I'm one of those people who prefers to learn from someone else's mistakes. If you're at all like me, and you have thought about doing a 1031 exchange into a tenant in common (TIC) property, take note. You can avoid making the 3 Major Mistakes that others wished they knew before leaping from the frying pan into the fire! Before I let you in on the secrets, let me briefly explainwhat a 1031 exchange into a tenant in common property is. It's a fairly well-kept secret in and of itself. A 1031 exchange is when an investment property owner sells his current property and exchanges it for a "like-kind" property of equal or greater value. By doing so, he defers the payment of capital gains tax and the consequences of recaptured depreciation. By exchanging into a tenant in common property, or a TIC, he becomes a part owner of a large commercial property managed by professionals, who in turn pay him a monthly income. It comes with fewer strings than private annuity trusts, charitable remainder trusts, or an exchange into another property that still needs your attention and often drains your wallet. I find that very few individuals, CPA's, attorneys, or even financial advisors are sufficiently well versed in the 1031 exchange into a tenant in common property. It can be a terrific deal! Those who benefit most from this type of an exchange usually have several things in common.1. They own investment property that has appreciated significantly in value. 2. They are tired of all the hassles of property management. 3. They don't want to pay huge amounts of capital gains tax if they sell. 4. They would like to have a significant increase in monthly passive income. 5. And, lastly, they still enjoy the relative stability ofowning real estate. Know of anyone who fits this description? If so, read on. There are 3 Major Mistakes that can turn your investment into a nightmare. So, avoid these at all costs when contemplating this type of exchange. Mistake #1: Dealing with an investment company that does not have their act together. If they seem like they don't know what they are doing, run! Look into their history of TIC offerings, and ask for referrals from satisfied clients. Ideally, this should be their only business. Are all their properties "A" grade commercial buildings, or are they somewhat less desirable? Ask how they find the properties and what criteria they use to select them. Quality properties are hard to find and sell out quickly. In real estate, the quality properties will remain more desirable, even when the mediocre properties start to lag. Ask yourself if you would like to have your office in that building, or go to see your doctor there, or if you'd shop in that strip mall. Note: Also be cautious going the private route and getting into Limited Partnerships when only one or two major players make all the decisions. And, unless you have extensive experience in commercial property, don't get together a bunch of your friends and choose this property on your own. Mistake #2: Choosing an Accommodator that has not done many, many of these transactions. This Qualified Intermediary makes sure all the documents and money transfers meet all the IRS guidelines. They will set up your LLC. You must use an Accomodator that you don't already have a relationship with. Your family attorney or estate planning attorney may not qualify. The last thing you want is the IRS sending you a hefty bill for taxes or penalties, or the whole transaction falling through due to an incompetent or inexperienced Accommodator! Mistake #3: Skimping on the property management company. They are extremely crucial to the performance of your investment. You will be depending on them to handle the day to day problems that arise, carry the proper insurance, pay the property taxes on time, and keep your building fully occupied and in tip top shape. This company should offer you a long term triple net lease that has your annual income percentagesspelled out, along with scheduled increases. There aren'tmany out there willing or able to do this. Ask for an accounting of their track record with other properties, how long they've been in business and for a list of any judgments brought against them. See if they've everrequested special assessments, or had any foreclosures. A good management company is worth its weight in gold. You want them to make a tidy profit, because their performance is directly related to your investment stability. Well, there you have it. Don't be "Penny wise and Pound Foolish". This is one time that hiring the best will definitely bring you the most favorable results. It should truly be a win-win situation for everyone involved. By avoiding the 3 Major Mistakes for a 1031 exchangeinto a tenant in common property, you will be the onesaying "I told you so" as you collect your monthly checkand watch your investment grow! Paula Straub is a Financial Advisor, Insurance Agent andMortgage Loan Originator in San Diego, CA. As a successfulbusiness owner, Paula strives to guide clients to financialindependence in the most timely and efficient mannerpossible. How much would you pay to save thousands in Capital Gains Tax? I'll teach you for free in a Teleconference that maychange your life. Sign up at ==> http://www.savegainstax.com
MORE RESOURCES:
Google News |
|
|
|
RELATED ARTICLES
Seven Tips in Choosing Maui Income Properties Aloha! If you are interested in choosing a Maui incomeproperty, then there are some details that you should know.You might be a bit intimidated by the whole process ofbuying a home. Real Estate: Choose a Realtor You Can Trust Today's volatile real estate market involves complex laws and fluctuating financial conditions. Maybe you've outgrown your first home; maybe you're in the process of turning over your fourth. Expenses of Home Ownership Hopefully all goes smoothly when you purchase your home. In your anxiousness to become an owner it may not have crossed your mind and no one tells you, your'e not done spending money on this transaction. Will a 1031 Property Exchange Solve Your Problems? If your problem is listed below, a 1031 exchange may or may not be your solution.1. Selling Houses: Design Psychology Works! I've taught the concepts of Design Psychology for many years, and I know how much it can empower a person, and allow them to create a fabulous home that sustains their emotions. Since it's based on science, I know that Design Psychology is effective at turning plain spaces into happy places. How Come No One Told Us About This When We Were Buying a Home? Development, it's bound to happen.Simply because there is a large open field, or the property you're looking at borders woods, doesn't mean it will or can stay that way in the future. First-time Home Buyers - 100% Home Loans There is an increasing trend in South Africa that is seeing youths entering property market at a much earlier age. These youths are mostly first-time home buyers, applying for their first home loan, who have been renting for a short while and feel the need to invest in a property of their own. Rapid City Real Estate Agents Take me Back to the Black HillsLocated in Western South Dakota, Rapid City is a thriving community with many amenities to offers its residents. This city is nestled among the beautiful Black Hills, offering endless recreational activities for the outdoor enthusiast in the Black Hills National Forest. Real Estate Investors - Red Alert How's the real estate marketing doing? Is the huge jump in home prices that is evident in some areas symptoms of a value bubble? Good questions, yes?Two things to keep in mind when surveying the market:1. All real estate is local,2. Real Estate Tax Incentives Lower Your TaxesTax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. To Buy or Not to Buy Purchasing a home is a major emotional and financial decision. Often times, people want to buy a home; however, emotionally cannot afford to commit to the home-buying process. Termite and Moisture Damage Not Reported I have done so many appraisals where I saw obvious damage that was not reported by the other inspectors. The first couple of times I thought it was just carelessness. 5 Secrets for Surviving a Real Estate Market Downturn History repeatedly serves to show us that the real estate market is cyclical. It has boom times and stagnant times, occasionally it suffers a crash but real estate never becomes worthless, therefore if the experts are right and we're about to suffer a slow to stagnant period in the real estate market, all is not lost!There are 5 fundamental secrets that real estate investors like to keep close to their chest and they are the secrets that enable them to survive and even profit during a bear market. Cashing Out of Preforeclosures - Exit Strategies for Maximum Profit One of the quickest ways to real estate profits is through preforeclosures. What is a preforeclosure, exactly? A preforeclosure takes place from the time the bank gives notice of default to the time the house sells at auction. Sell Your Home Without Paying Any Commissions All of us know that real estate commissions can work out to quite a bit of money - anything from a few thousand dollars with discount brokers to 6% in commissions with full-service agents. That's a substantial sum of money to be paying for something you could very well do on your own. Prepare Your House for a Successful Sale Whether you list with an agent or sell on your own, you can ensure a quick sale by proactively preparing your house to be a highly marketable and attractive commodity.Paradigm ShiftDon't wait for the sold sign to get started with packing. Buying A Home - Rain, Sun, and Weather Issues When buying a home, it can be easy to overlook year-around weather issues. You may think you are purchasing a home in a sunny area, but come to find there is always a heavy cloud cover. How To Give Your Home A Face-Lift: The Sellers Guide To A Quick Sell One of the great challenges to selling a home can be showing all of its space, decor and natural light potential. For example, every home has crowded closets and dead space. Achieving Positive Cash Flow from Your Real Estate Investments Even if you're counting on rising property values to eventually make a profit on an investment property, it's far more desirable to have a positive cash flow each month. If you're losing money on a property every month, it may not take long until your future profits will have been lost. Sellers, Are You Having A Hard Time Selling Your Home? Sue and Chuck DeFiore have the perfect solution for you - Lease Purchasing your home!What is Lease Purchasing?A Lease Purchase is a process that combines a basic rental lease with an agreement to purchase, or with an option to purchase the property. The Buyer (or Lease-Purchaser) pays to the seller a monthly payment that usually approximates a rental amount or a typical mortgage payment on the home.
|
| home | site map |
| © 2006 TIGER MEDIA |
