1031 Exchange Strategies for Investors

Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.

Jack: This is Jack Shea and I want to talk to you about 1031 tax-free exchanges.

Mike: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.

Jack: I have been doing 1031 exchange facilitator services for investors since 1986. We do thousands of them. I’m an exchanger for myself. We do hundreds of exchanges. We do them every day for investors coast to coast.
So it’s the benefit that real estate investors can have if they own a property for over a year or one year and a day, and it’s an investment property. They don’t live in it, and they didn’t buy it to flip it or build the property. It’s an investment property, any type, any place, land, boat slips, houses, condos, farms, whatever type of investment property that you can sell the property and take the gain, the proceeds go to an intermediary, like my company. You get 180 days to spend your money on finding other properties and you must identify some possible properties within 45 days.
I have a website, 1031taxfreesale.com that has rules about the timing. It costs $750, which is a modest amount, and it’s been the law since 1921. It’s up in Congress to be eliminated as a revenue raiser, and at the moment, it’s on hold.
But there are many things that you can do with this exchange that you can change the use. You can buy or change from land to investment houses, you can go from condos to land, air rights, mineral rights, you can buy oil royalties, and you can move from Michigan to Florida, or California to Nevada, you can go to different states, and it improves the flexibility of your investments.

And there are a lot of things that you can do with, say they’re part attendants in common, partnerships are possible to exchange. You can exchange with family members under certain rules. We do, say somebody lives in half of a duplex and rents the other half, you can do half of an exchange with the Code Section 121 for the residential part, and 1031 for the other part.

There are all kinds of combinations. You can exchange trust shares, even though it’s personal property. You can build a building. I built an office building for somebody that they took the funds and built a building on their own property. It has to be done in 180 days. You can carry solar financing in an exchange and use those funds to buy the next property or you can purchase [Inaudible 00:03:49].
So there are all kinds of combinations of exchanges that any investor can take advantage of to keep their investments growing or they’d like to change the type that they’re in, or the location, they can do that. And we also do a reverse exchange on some occasions. If people have a great deal that they can’t miss, and it’s going to go away, they can buy the replacement property first, and we hold title to that, and then when their other property sells, they can pay that off.
So take a look and think about the rules for your investment program. I know many investors have been exchanging for 25 or 30 years, and they multiply and pyramid their investments in different ways without paying the tax and when somebody dies, their heirs get the property at a stepped-up basis and the tax number has to get paid. So think about 1031 exchange when it suits and contact us or anybody that can help you out. Thank you.

Mike: HomeVestors, the “We Buy Ugly Houses” folks, is a franchised system of hundreds of real estate investors that have purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take his business to the next level, or whether you have no experience at all but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.

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