Obviously, the reason you chose a 1031 exchange was that you wanted to swap your non-performing asset with a premium property without being taxed. With the proceeds in your hands, you must be hunting properties one after another. You can more easily find replacement property if you have a 1031 properties list. However, in case you don’t have a property list, you must know about different investment options that qualify for a 1031 exchange. Depending upon a few factors like location, Cap Rate, NOI, etc., you can invest in one of these properties. You can also split your 1031 proceeds and invest in multiple assets. If you’re already in your identification period, look out of a transaction that can be closed easily and in less time.
DSTs are the Best Mode of Passive Investment.
What if you don’t want to own an investment property all alone? Possessing an income-producing property not only means a regular flow of monthly income but also brings the burden of property management. With a DST investment, you no longer need to look after your property as there are professionals who look after it. A DST usually has multiple assets in its polio, and you can invest in multiple DST properties at once (if you want to). A DST can have a hundred investors or even more. You can also swap a non-performing asset for a DST property using a 1031 exchange.
Net Leased Properties Don’t Include Landlord Responsibilities.
There are mostly two reasons due to which investors choose to sell their investment properties – the rising landlord responsibilities or falling net operating income (NOI). By investing in a triple net property, you can overcome both obstacles at once. A triple net lease shifts the responsibilities from the landlord’s shoulder to that of the tenant, so you won’t be required to pay operating expenses from your income. Plus, you save time that otherwise you would waste in tracking bills and paying them.
A Shared-ownership Structure like a TIC can be a Good Option if you Don’t Want to Bear the Entire Risk Associated with Owning a Property.
Tenancy-in-common or TIC investment lets you own large investment properties in collaboration with other investors. There are up to 35 investors in a TIC. TIC properties are high-performing assets, and you can acquire co-ownership of one such asset by investing in a TIC. A TIC investment also qualifies for a 1031 exchange, so you can also reinvest in your 1031 proceeds into one of the TIC properties.
When planning a 1031 exchange, you want to speak to a 1031 expert or an advisor in the beginning. You can reach out to someone you know has the knowledge about 1031 investment, or you can consult a real estate firm that facilitates 1031 exchanges.