1031 Exchange - Who to trust?

Question

Looking for a good recommendation on an intermediary to execute a 1031 on 2 deals I am doing in PA.

This is my first attempt at a 1031 exchange and I honestly feel a little weird wiring a boat load of money to some company I googled 10 minutes ago.

Henry Clark · Answer

Talk with your realtor and have them recommend an intermediary.

Account Closed · Answer

Dave Foster is a pro and would highly recommend him. He's usually good about replying to 1031 exchange related posts so I wouldn't doubt that there will be a reply from him in an hour or so. He has some great insight on 1031 exchanges and knows exactly how to help!

Drew Ogden · Answer

I have used First American Exchange many times and they have been great.  They are connected with First American Title, so definitely not a shady organization.  I think they charge about $900 per exchange, which is hard to beat...

Dave Foster · Answer

Thanks for those kind shout outs everyone. @Vincent Plant, Nothing replaces good old due diligence.  So you're asking the right questions.  Many folks fixate on cost of the process.  Here's an article we update periodically for BP on what you can expect for costs of a 1031 - https://www.biggerpockets.com/...

Others rightfully focus on the QI's performance.  Talking with actual customers of a  QI will tell you a lot.  The reference feature on a BP members profile is also a great place to see how the QIs here do.  And verified users posting google reviews are also pretty accurate.

The biggest issue though is going to be safety of funds.  The industry standard is still to have pooled trust accounts and then carry a fidelity bond for the those accounts.  Unfortunately that means two things.  First even the best bonding in the world only comes into play after a bad event!  I'd rather avoid the bad event.  And second it still leaves you at the mercy of the QI and all of their other clients.  A few of us take the time to set up segregated dual signatory accounts in your name and ours.  This way the funds are never out of your control other than the legal constraints of the 1031 exchange.  Money cannot be moved without your signature.

So, look for a nationwide intermediary with demonstrated experience who will be available to guide you through the process (not just fill out forms) and who gives you some actual control over your proceeds.  And you'll do well.  As I tell our clients - "The only scary 1031 should be your first one".

Alex Olson · Answer

Dave Foster is really great. He is on this site. @dave Foster. Very knowledgeable and can walk you through the process. What state will you be looking to exchange into? Cash flow state like KS or MO or appreciation like coastal?

Scott E. · Answer

I agree with @Henry Clark in that you should ask a real estate agent or another investor that you know and trust for a referral.

Last year I did my first 1031 and you're right - It is very weird and scary to have all of that money wired to some random person that you just met. But I felt much better knowing that I was working with somebody that my broker recommended.

Ryan Beatty · Answer

I've worked with IPX, Exeter, and SPE a bunch

Scott Titus · Answer

@Vincent Plant

I used Chris Nese at apiexchange.com 3 times, I’m happy to share his email if interested. They were incredible, took care of all of the heavy lifting and were incredibly patient with us. The first time we had no clue what to expect and they really took their time to explain everything.

Judy Parker · Answer

National 1031 Exchange Services. They do excellent educational  Zoom webinars - I participated in one today. Go to their website for more info. December 6th, 2022 webinar will be about Complex Spendthrift Trusts.

Moses Moreno · Answer

@Vincent Plant

We used Exeter 1031Exchange and everything went seamless! It was our first 1031 so we had some of the same concerns. We did plenty of due diligence and landed on Exeter and they delivered!

1031 Exchange - Who to trust?

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