Free 1031 Exchange Hotline: 877-471-1031

Housekeeping

1. Do you need to open a 1031 Exchange Account?  Call 877-471-1031

2. Want us to send your listings to our client base? Submit your listing.

3. Have questions about the 1031 Exchange process?  Call 

   877-471-1031

How's the 1031 Exchange Business?

Many people have asked lately, “how’s the 1031 Exchange business?”.  Although volume is down as a result of the overall market conditions, investors continue to exchange property at a solid pace.  

While many of our client’s primary motivation for exchanging is the deferral of taxes, in 2008 we saw many other motivating factors come into play.  For example, a few ‘non tax’ reasons investors decided to exchange included:

Lifestyle Changes
Many of our clients chose to exchange out of management intensive properties and into properties that require less hands on management.  As a result, we saw many clients exchanging out of several small properties into one large property to consolidate the ownership benefits and reduce their management responsibilities.   

Another popular lifestyle move was to exchange out of actively managed properties and into 3rd party managed properties.  For many clients this was accomplished by selling one or more single family rentals and exchanging into fractional ownership of a large institutional property via Tenant In Common (TIC) ownership.  

One interesting 1031 Exchange done purely for a ‘lifestyle’ reason was our client who happened to be a retiring attorney.  He sold the office building that housed his law firm and exchanged into a 10 room Victorian.  His goal for the Victorian: create a bed and breakfast that he and his wife could manage during their retirement.

Portfolio Reallocation
In 2008 not all of our clients were looking for lifestyle changes. We also worked with aggressive investors acting to improve the position of their real estate portfolios.  Some of the changes these investors made included:

• Exchanging out of a fully depreciated property into a higher value property in order to increase depreciation deductions.

• Exchanging from non-income producing land into a positive cash flow single family rental.

• Exchanging out of property that could not be refinanced (vacant land) and into an tenant occupied property that could be refinanced.

• Exchanging out of a negative cash flow property in San Francisco and into three positive cash flow properties in Sacramento.

• Exchanging out of property located out of state and into property located near the investor’s home town.

It is true that the real estate market has changed significantly and we can probably expect more unchartered waters ahead.  However, there will always be real estate investors looking to exchange regardless of market conditions.  At Asset Exchange Company we look forward to working with those investors.

The subject matter in this newsletter is intended as general information only and not intended as tax or legal advice.  Please always consult your tax or legal advisor for any specific tax or legal matters.