are we reliving 2009 and how can 1031 mitigate risk
In 2009, after the collapse in the housing market and after the banks cut off further funding and called in loans, you were able to buy 1st mortgage debt for .10 cents on the dollar. 2nd mortgage liens were available at 1-2 pennies on the dollar. REOs could be bought for .20 cents on the dollar, and if it were in Florida, no one would touch it. Did you take advantage of that?
TODAY, 1st's are selling for .40 - .80 cents, 2nd’s are selling for .25-.50 and REOs .70+, oh and if you bought Florida in 2009/10 you were brilliant and crushed it!
We all already know that opportunity investing is all about timing! Today exists another opportunity that only the enlightened few will be able to take advantage of.
Everyone is enjoying prices at the pumps at 20 year lows (adjusted for inflation), everyone except for small and medium oil & gas producers that can't afford to continue operating with their existing debt and the price of oil at $30 a barrel. Once again, the banks have compounded the problem, for these oil producers, by cutting off further credit and calling their loans. And once again, illiquidity and distress have created an opportunity to salvage value for a profit.
Many industry professionals believe that the real-estate market will collapse in the next 24 month. This is already happening throughout Midwest as energy companies are cutting their workforce. As stock continue to fall, these massive job cuts will spread like a virus across the US and global economy. This will translate to a massive real-estate collapse as people won't be able to afford their mortgages and rents. It'll be 2009 all over again, and unless you want to see your hard earned cash evaporate or give your real-estate back to the banks, diversification is your best option.
Oil & gas and real-estate are considered identical in the eyes of the IRS. A 1031 exchange is the most effective way to transfer cash from real-estate to direct oil and gas ownership through working interest partnerships without paying taxes or fees. Being that the energy industry is at a 20 year low, now is the best time to invest in it and catch the inevitable upwards momentum. Whether you do it via 1031 or direct cash injection, keep in mind you must own physical assets, not just stocks, to be considered an active investor, and be able to reap all the tax, and government benefits of an oil & gas producer.
If you have any questions on oil and gas or how a 1031 works in this scenario, leave a comment and I will reply.