All Forum Posts by: Sam Liu

 Personally I wouldn't buy any property occupied, I'm interested in the asset itself and will decide how I operate said asset.

I have had two clients now do a REVERSE 1031 Exchange. This is when you buy first, then sell. The 180 days still applies, so after you buy, you have 6 months to get your property sold. Because it is a more complicated process, the exchange fees are higher (around $7K versus $1200) but in the big scheme of things it could be to your benefit.

When you speak with the exchange accommodators, ask them for referrals on lenders that can facilitate this, as not all lenders can make this happen.

@Sam Liu This is a common concern for people who are looking to do 1031's. One thing we advise our clients to start proactively looking for solid potential replacement early, and that would have the least amount of complications when trying to close. There's nothing preventing you from looking at replacements properties prior to closing on the property you're selling, You can even be under contract before you even close on your relinquished property.

Your property has dropped in value over the last two years? Dropped enough to erase all your gains? Sell now! Without a 1031. Put the cash in your pocket and escape that market. You should be up 5-10% over the last 2 years, not down. Especially not down a real amount. 

You do a 1031 to defer taxes sure. But you also do it to escape a bad market choice, or a market that has turned bad. You do it to escape a property that has aged poorly and has become a money pit. You do it to increase your leverage. You do it to change property types. There are plenty of reasons, and a 1031 is really a lot easier than you think. It’s never taken me 45 day to find a decent property to buy, and you can start looking 15+ days before your sale closes if you are in a tight market. Closing in another 135 days should never be an issue, especially if you picked your property and did your inspection before the 45 days expired. 

The “last” exchange I did last year. (Also my first.). I closed on my replacement property before the 45 day window closed, much less the 180 days.

TLDR:  if you’ve truly picked one of the worst markets in America and lost all your tax deferred gains. Simply, sell. You lost $1,000 give or take for doing a 1031, but you don’t owe extra taxes. If you still have enough gains to justify it, sell and do a 1031, it’s a non-issue. Good luck. 

Sam,

I found that doing the 1031 exchanges during the winter has worked well for me.  The market is slower and less competitive so for buying is great during the holidays so listing to sell in the fall works.  I am in Vegas so the market is somewhat stable and has good demand so selling isn't too difficult here.  I think the key is to do these during slow or at least stable times and not during major market shifting factors like the interest rates increasing rapidly.  

The Qualified Intermediary that you select to support the Exchange is important and price is just one of the factors to consider.

Happy to make an unbiased recommendation if you’re looking for more options.

@Sam Liu you might consider Reverse 1031 Exchange to avoid some of the challenges you mentioned you faced with timing and traditional 1031 exchange.