In the last few days, things have started to restore to normal in some parts of the United States. Businesses, restaurants, and markets have got permission to resume functioning with some restrictions. However, we have not reached the normal state as things were before the lockdown. People are still advised to maintain social-distancing and follow stay-at-home orders. Undoubtedly, the coronavirus pandemic has severely hit the real estate market in the country. Investing in real estate has become almost impossible. However, you can still do a 1031 exchange or invest in real estate without stepping out of your home.
A Qualified Intermediary (QI) can help you set up a 1031 exchange.
As you may know, you must hire a qualified intermediary to qualify for a 1031 exchange. Due to the lockdown, QIs are also operating from homes and helping investors close their 1031 exchanges. You can reach out to a QI and ask them to draft a 1031 exchange agreement for you.
Finding a buyer for your property is the only obstacle.
As mentioned earlier, investors are refraining from investing in real estate. The good news is the investments haven’t stopped completely. You may have to put some effort into finding a buyer for your investment property. However, that’s the only challenge. Maybe, you can make use of your contacts.
Look out for pre-packaged investment options like DSTs.
The next task is to identify a replacement property. Thankfully, the IRS has extended the 1031 exchange deadlines to July 15. So, there is no pressure to identify a replacement property within 45 days. But, there is no certainty when the lockdown will be lifted. Therefore, considering the present situation, going with pre-packaged investment options like DSTs is a smart move. You can make use of DST 1031 exchange and invest in a DST property. As DSTs can be closed digitally, you can choose a DST property while enjoying your coffee at home. Some real estate firms are offering DST services from home at the moment.
For no management responsibilities, invest in NNN properties.
The future looks uncertain. There are chances that you may not want to indulge in property management in the coming days. You can reinvest your 1031 exchange proceeds into a NNN property to get rid of landlord responsibilities. As most NNN tenants are big companies like KFC, McDonald’s, CVS, etc., you can expect a regular flow of income without any risk of default.
Whether you choose a DST investment or invest in a NNN property, it’s recommended that you speak to NNN DST experts first. Having the assistance of an expert is invaluable.