In this article, we discuss key points of a 1031 Exchange and buying a triple net retail property.
- Plan in Advance
Planning in advance is a crucial element of a successful 1031 exchange. Once the property is sold the 45-day ID period begins and typically the family decides to take a vacation to celebrate. The issue is that the seller only has a few weeks to identify which property they would like to purchase in the exchange and after the vacation, no properties have been identified. The sellers are then left with the decision of buying a subordinate property or paying the tax penalty.
2. Find a great broker
We suggest finding a great broker that has a large database of both on and off broker triple net properties and also one that is also a buyer’s broker. The listing broker is representing the seller and selling whatever is in their inventory. The buyer broker represents the investor and can look into all of the seller’s inventory, the listing brokerages, on and off-market properties to find you the diamond properties to purchase.
3. Establish financing ahead of time
We recommend making sure you know what type of property you qualify for so that you know what your expected cash flow returns are on a particular property.
If you’re interested in learning more about the 1031 exchange process, download The Guide to 1031 Exchanges.