Some cool 1031 cats right here in the Asheville, NC real estate investment market can see what's in the picture right away.
Others need to take some time to "take stock" of the whole scene. Today I am writing about 1031-savvy "cats' . . .real estate professionals and investors who fall in both categories.
Have you ever met someone who always seems to have a reference guide in her tote bag, a "compass" if you will...?
For me, that would be "Marie". I long had suspected Marie carried her "compass" in her big black briefcase. A conversation just the other day confirmed it. I asked Marie who, by the way, is an accountant , my favorite question:
(cool 1031 cat photo by janeAnne)
"Hey, Marie," I asked quite pointedly, " What are your top 1031 investment strategy tools? (You learn so much about an investor's priorities and style by asking good questions, don't you think? )
"I'll tell you, janeAnne," she replied. "I only have one tool I consider essential. That's my 1031 Compass. It keeps me sure-footed as a cat on a ledge. "
Now I know Marie, And I know what she means. Her "compass" is really a system for gathering information. Marie once told me, "Any investment strategy has to include tactical know-how. That means knowing the market, the market trends, who you're dealing with, asking good questions, doing your homework, getting the facts and . . . putting together a professional TEAM."
On the subject of the "team" an aside well-said from Wikipedia:"Anyone who is related to the taxpayer, or who has had a financial relationship with them within the two years prior to the close of escrow of the exchange can not be used as the QI. This means that the taxpayer cannot use their current attorney, certified public accountant or real estate agent. A corporation or other entity to act as Qualified Intermediary owned by your CPA, CPA firm, real estate agent or attorney is likewise disqualified."
So often in the excitement or acquisition, less seasoned investors forget to check their bearings. What is assumed to be familiar territory turns out to be quite the opposite. That's what a 1031 "Compass" is for. So here's my handy "Compass" for smart 1031 Exchanges and real property investors.
A 10-Question "1031 Compass"
- When relinquishing property, did you include the required 1031 Language in your listing?
- Are you "coach-able"? Do you have a good coach?
- Do you understand the leverage power of a 1031 Exchange?
- Do you understand time-lines & how important they are?
- What does "depreciation recapture" mean to you?
- Is your team together? REALTOR®, Attorney, Qualified Intermediary, etc.?
- Is your certified Qualified Intermediary a Certified Exchange Specialist (CES)and member of the FEA?
- Does your REALTOR®, and do you understand the 3-Property Rule?
- Have you familiarized yourself with the mixed use parameters?
- Having gathered your team, your data, etc., and used your "compass" have you also relied on your intuition and insight?
Let me know what you think.
"Subscribe to Your Favorite BLOGS, Comment & Bring Your 'Energy' to the Posts You Read"
~ Green-o-Lina
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Steph~
As you can tell from comparing responses when I write an eco-friendly post and one that deal with 1031s, people read more than comment =) I'm not discouraged, though...when people comment as YOU have, I feel as if I am providing some good information...
Too, my experience has taken me working just in the 1031 niche alone...to seeing the application in the building-high--performance market.... I like the idea of the eco-freindly 1031. . .how about you?
Hi Susan~
Good to hear from you!! I really like working with 1031 clients. Have you ever met one who is down to the last week and needs to find a replacement property...NOW? That's what I call FUN =)/
Hi janeAnne,
Another really good post. But that is what I expect from you. Your checklist is great as fas as it goes, but I have another idea to broach.
Maybe this is a good time to "break" the 1031 exchange cycle. Pay the tax. Invest the proceeds in a trust of some kind which will grow tax free. You will no longer be bothered by 1031 "rules" and the tax you pay now will be a lot less than the tax you won't have to pay later.
Taxes are going to go up. We are in a very good "tax paying" environment.
Bill Roberts
Bill~
I am open to reading about your ideas about a land trust (in particular)...I am very interested in conservation land trusts...
janeAnne, I'm working on the article on trusts. When its done I'll let you know.
Bill Roberts
Bill~
Are you done with your article on trusts? I haven't her back from you , yet...and I am considering working on some publishing efforts for all of us at AR.