WHAT IS YOUR INVESTMENT OR EXIT STRATEGY?

When investing in real estate (or any other investment…stocks, bonds, and all the rest) you should have an Investment Strategy. As your investing, you should have an Investment Exit Strategy. These strategies may be constantly evolving or changing, but a goal is needed when buying properties! Simply putting your thumb up in the wind is not a good buying strategy and paying a lot of money in taxes is not a good Exit Strategy!

Many people starting buying rental property with a “Buy and Hold Mentality” which is a fine plan and very common. Maybe at some point they sold some and bought bigger units, or simply leveraged the first ones they bought, to buy more. This is a common practice, and again this is not a bad strategy. But there are other strategies and you should have a plan for what you hope to accomplish.

But now you are getting up there in age or your attention is turning to other matters and you want to lessen the load or simply EXIT out of your real estate Investments. Maybe it is time to buy a larger building/number of units to make your work/life easier (Not always the way it works….) or it is time to simply divest your properties and travel, spend more time golfing, or more time with the grandchildren. Perhaps there is a whole other idea or goal! Either way you need to keep in mind that you can “exit” but not really “Exit”, by this I mean you can lessen your work load, but not really get out of your real estate investment as there are options!!!

About 88% of real estate investors sell their property, for what ever the reason, and pay the IRS big money in taxes! Is that why you worked so hard? Is that why you took on all the risk? I would certainly hope not! There are options!!!!

Section 1031 of the Internal Revenue Code allows you to exchange real property (“Relinquished Property”) that was held for investment or business purposes FOR OTHER real property (“Replacement Property”) that will also be held for investment or business purposes. Perhaps you desire to do this to buy a larger unit, of more space for your business, or to lessen your work load. This process will enable you to defer the payment of your ordinary income, capital gain, depreciation recapture and/or Medicare Surcharge (“Obamacare”) income tax liabilities. What all that mean in plain English…Sell your property and buy another and NOT PAY TAXES if it is done right!

First when doing 1031s, you can do what called the Forward 1031 Exchange which what we are all most familiar with, sell one property and buy another within the rules. You can also do a Reverse 1031 Exchange where the property that you want to acquire is purchased before you sell the property you own now. More complicated, Yes! More Expensive, Yes! But if it helps avoid paying big taxes, then it is a win-win!

There is also the Improvement 1031 Exchange or what is also called the Build to Suit 1031 Exchange. Here your relinquished property funds are used to acquire new property and then to build, construct, or improve the new property. Again, a more expensive 1031 Exchange method, but another method to avoid paying taxes. Again, if it can be used to avoid paying high taxes, it is a benefit to you.

BUT, I KNOW WHAT YOUR THINKING! What do I buy???? Perhaps you are not looking at an overall exit strategy, but your Investment Strategy is to grow and want to sell your small units and buy bigger number of units. Or you want to build some new units. This where we can help! With our help, you need to have a good plan and a goal! Together we can accomplish this goal for you!

BUT WHAT IF you are looking to exit your investments and you want to sell, but you do not want to manage a larger number of units! Or you do not want that triple net property, no matter how easy to manage. THERE ARE OTHER OPTIONS! There are was to stay in real estate, not pay taxes (at this time), get a monthly payment and capital appreciation!

This is where we can help! We have the options and we know the experts that can handle the transactions properly for you. We know the professionals that can guide you into other investments that will simplify your life. We search out land or new properties that fit your needs. We are not real estate agents that throw you or your property on a list and wait for someone to come to us, we go out looking for the right deal or property for you! We work harder to earn your business and advance your Investment Strategy or work to make your Exit Strategy work for you.

Call me today and let’s sit down and talk about your plans and strategies! Together we can find a plan that works for you!