Finance: Preserve Equity, Build for the Future Using a 1031 Tax Exchange

Preserve Equity, Build for the Future Using a 1031 Tax Exchange

Written by Neda Dabestani-Ryba

Continued from page 1
1031 Exchanges are complex mechanisms and like all IRS requirements very specific. For example, exchangers have 45 days from closing to identify properties they intend to purchase and 180 days to complete repparttar

purchase. Purchase and Sale agreements must include verbiage indicating repparttar 150448

intent to affect a 1031 Exchange. The 45-day time frame used to be onerous for sellers. Now, they can opt for a Reverse Exchange, in which an additional third party called "the exchange accommodation title holder" (EAT) acquires title to repparttar 150449

replacement property until repparttar 150450

original property sells. Reverse Exchanges shift repparttar 150451

45- and 180-day time frame to repparttar 150452

selling side of repparttar 150453

transaction. With an Improvement Exchange, which also uses an EAT to hold repparttar 150454

replacement property, sellers can build investment properties from repparttar 150455

ground up or improve existing properties. The improvements have to be built and paid for during repparttar 150456

180-day period. If you are interested in a 1031 Exchange, repparttar 150457

first step is to consult your tax advisors as well as an attorney or CPA who is knowledgeable with 1031 Exchanges. Make sure that your real estate professional knows you plan to conduct an exchange and be sure that he or she is familiar not only with repparttar 150458

process but also with repparttar 150459

specific documentation and time frame mandated by repparttar 150460

IRS. This article is intended to inform readers, but does not constitute any financial or legal advice.

Neda Dabestani-Ryba is a licensed Realtor in Maryland. She is a member of the President's Circle of Top Real Estate Professionals. She can be reached at (800) 536-3806 or visit her website for more information: http://neda.dabestani.pcragent.com/ Prudential Carruthers REALTORS is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential Financial company. Equal Housing Opportunity

How to Eliminate Risk in Real Estate Investment

Written by Neda Dabestani-Ryba

Continued from page 1

6. Failing to Have Adequate Insurance - Investment property brings liability. Tenants, cars, parking lots, cleaning facilities, property liability - repparttar list is quite extensive. Adequate insurance coverage is an absolute must! Be sure to consult with an insurance professional and protect your hard earned assets.

7. Inspect, Approve, and Confirm All Documents - The list of documents that need to be proofed can be overwhelming to repparttar 150447 first time investor. Building permits, zoning laws, rental and lease applications, health licenses, laundry leases, underlying loan documents, CC&R’s, by-laws, title policies, mineral leases, inspection reports, purchase contracts, insurance.. don’t attempt to do it alone. The right professional can remove most of repparttar 150448 stress and bring repparttar 150449 transaction to a conclusion smoothly.

8. Get a Bill of Sale For All Property Involved - Many types of personal property (appliances, furniture, fixtures, etc.) can be involved in an investment sale. Be very detailed -know who owns what!

9. Charge Fair Rents - Vacancies, turnovers and lease terminators are your biggest expense. Charge fair rents, treat your tenants with respect and respond as quickly as possible to their needs. It’s a lot less costly in repparttar 150450 long run to take care of repparttar 150451 little problems before they become big problems. Vacant property is your Achilles heel.

10. Select Qualified, Good Tenants From repparttar 150452 Start - Take repparttar 150453 time to check references. Previous landlords, employers, financial references, credit and judgments are all vitally important. If there are any questions do a thorough investigation. Drive by their previous residence. A little work up front can save tremendous problems later.

11. Make Sure You Get Estoppel Letters - Get letters from tenants confirming repparttar 150454 status of tenancy. Make sure their version of repparttar 150455 rental or lease agreement corresponds with repparttar 150456 sellers interpretation.

12. Don’t Spend Positive Cash Flow - Most of successful investors have free and clear properties. Be sure to re-invest your cash flow back into repparttar 150457 property payment and speed up repparttar 150458 amortization schedule. This decreases your debt load and increases your equity which builds your net worth. Investment property can be one of repparttar 150459 most rewarding aspects of your financial portfolio. Be certain to have all your ducks in a row before you invest. Do your homework! Consult with a professional real estate agent and protect yourself from repparttar 150460 hidden troubles that can plague first time investors.

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