Who do you use as a 1031 Exchange Intermediary ?

Question

Hello Fellow Investors,

Who do you use for your qualified 1031 exchange intermediary ? I am searching for a qualified 1031 exchange intermediary for our personal investments as well as for my clients. I have found the company accruit www.accruit.com They appear to be very professional and legitimate.... Has anyone used this company before to complete their 1031 exchange? Your feedback & recommendations are greatly appreciated : )

Thank You All,

Derek Stalhut

Multi- Family Investor & Real Estate Agent in Vero Beach Florida

Alex Olson · Answer

@Derek Stalhut I would recommend @Dave Foster. He has been doing it for years and knows the ins and outs...he is also creative in what you can and cannot do. What area are you looking to exchange in to?

Greg O'Brien · Answer

@Derek Stalhut highly recommend @Dave Foster as well. He is currently helping one of our clients

Steve K. · Answer

I referred @Dave Foster to an investor client for her 1031 this fall. She was very impressed with Dave and his team and the 1031 went very smoothly. Plus one for Dave!

Jim K. · Answer

I am in the middle of my first 1031 exchange right now. I immediately called up @Dave Foster and signed on with Exchange Resource Group as soon as I knew I would need to go through with one.

So far, it would be difficult to imagine a better, more capable Qualified Intermediary than Dave and his team.

My real estate agent on the selling end claims 28 years of experience in the residential business -- yet this is his first 1031 exchange. My title company on the buying end has minimal experience with this (I think this is their third 1031 exchange) and is also shepherding the deal through as an FSBO. Having a rookie real estate agent on the selling end AND a largely inexperienced title company on the buying end handling a complicated transaction AND me as a newbie...if I had had a tentative QI who "kinda-sorta knows" what needs to be done, it would have significantly upped my stress levels.

Feel free to contact me about this recommendation.

Joe Splitrock · Answer

@Derek Stalhut I used my local title company for this that had in-house capability for that. I sold and purchased through that title company and as a result there was no third party interaction required. For me that was easier, but if you are using a title company without that capability or buying and selling at two different title companies, consider a third party. @Dave Foster is worth checking out.

Dave Foster · Answer

@Derek Stalhut, Accruit is a very good company that has been around for a while. They made their mark in personal property exchanges (heavy equipment, airplanes, etc). And since personal property was excluded in 2018 they have pivoted to market more heavily in real estate exchanges.

You're right to look for a dedicated intermediary company with a national footprint and longevity in the industry. The thing you want o watch out for with any large company is to make sure you are assigned a senior consultant. Your experience is only going to be as good as the performance and ability of the person you talk to on the phone.

A lot of title companies will have a QI firm associated with them either legally or someone like us where we are not affiliated with them but they refer their business to us. You can check with them. And there are a several good QIs here on BP. You can go to the reference section of their profile and actually interact with clients who have used them personally.

Dave Foster · Answer

@Steve Morris, Zoooikes! if I sent out a letter to a client (as I do everytime) telling them in writing that March 15 was their deadline and it was really March 13 then my clients have an idiot for a QI. Because I didn't just give wrong information to one client. I can't count days. So all of my clients are getting bad information. Jinkies!!! Since we guarantee our work in the clients exchange - we'd be liable for an adverse outcome from that. And that's really what E&O insurance is for - remedy after the fact. It isn't protection from the bad actions of a bad QI. It just helps you clean up some of the mess after they screw up.

But many (I almost want to say most but can't for sure) QIs will not do that. They will want you to indemnify them from all liability for everything. You have to read the contractual exchange agreement and understand where they are drawing the line at accepting responsibility.

Hey, it's actually another Goldilocks situation :). If the QI is guaranteeing you everything then they are way too involved in your financial, accounting, and legal business to be either healthy or legal. If they won't guarantee anything then there's probably a reason for their fear.

So you look for the just right QI - who guarantees their work as the QI and nothing more. But who operates as an active team member with you to assist your other professionals and help you apply 1031 strategically to your actions. There are so many ways to use it. But you have to understand it. And that's the QI's job.

Dave Foster · Answer

That's a very fair question @Steve Morris. Everything is contractually agreed upon and that contract (the exchange agreement) is the basis for any E&O claim. In the classes I teach on 1031 I emphasize that the QI should "guarantee" their exchange in the exchange agreement.

Now what I don't mean is that they should guarantee the exchange passes any audit. If a QI tells you that run away from them because they're just lying to get your business. The QI doesn't know everything that's in your tax return and business practice to make a call like that - even your accountant is only going to give you degrees of risk.

But, the QI can certainly guarantee that your exchange will never fail because of the process they take you through or the documentation they provide. Exactly the things you're talking about. Make it contractual. Make them guarantee their work on your exchange.

Steve Morris · Answer

NO I AM NOT IMPLYING ANY PARTICULAR QI HAS SCREWED UP - Just asking.

Dave Foster · Answer

@Derek Stalhut, I sent you a pm with my colleague request so we can talk off forum. Gotta hear about the sailing environment in your neck of the woods these days.

@Steve Morris, It's not just Portland (although that could be part of it :) It's kind of a Goldilocks kind of thing. The largest "corporate" companies got there by hiring to fill growth. So the separation between the really knowledgable senior folk who know 1031 and the sale staff who interface with the clients just gets bigger and bigger. So you're experience isn't dependent on the quality of the company. It's dependent on the quality of the sales person assigned to you. And that can vary a lot - especially if there's a separation between them and the help and answers they need (which is what sounds like your case).

But on the other side, a really small firm or an attorney who only does a few along with their other business lines doesn't have the depth of knowledge to help you. So they're inventing the wheel while guiding you. They can be the most responsive person in the world but without experience or the volume to get economies of scale it won't be a good or cheap experience for you.

So you try to weed out too big and too small and find Just right - responsiveness and experience at a reasonable price.

Who do you use as a 1031 Exchange Intermediary ?

Who do you use as a 1031 Exchange Intermediary ?

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@stan Matusz Do you know whether IPX does smaller transactions? i.e. Less than $2 million?