1031: Alligator Blunder:
There are 3 major Blunders that can turn an investment into a
nightmare. It is one's duty to avoid these at all costs when
contemplating a 1031 exchange.
Blunder #1: Dealing with a non specialized company that does not
know what it really does. Check their history of TIC offerings,
ask for referrals from satisfied clients. Ideally, they should
only be doing this kind of transactions. Are all their
properties "top of the range" commercial buildings or not ? Ask
how they get listings and what are their criteria to select
them. Quality properties are hard to find and sell out quickly.
In real estate, quality properties remain always desirable - low
ones lag. .
Blunder #2: Choosing an Accommodator that has not done many,
many of these transactions. This Qualified Intermediary are here
to make sure all the documents and money transfers meet IRS
guidelines. They are the one that will set up your LLC. Using an
Accomodator with whom one has already a relationship, like a
family attorney or estate planning attorney is a Blunder because
they may not qualify. Do not forget, in case of bad paperwork,
the IRS might send a nice bill for taxes or penalties. As bad,
the whole transaction can fall through due to an incompetent or
inexperienced Accommodator.
Blunder #3: Negotiating too hard on the property management
company. These people are extremely important to the performance
of the investment. The investor heavily depends on them to
handle the day to day problems, carry the proper insurance, keep
the building without vacancies, in nice condition and pay the
property taxes on time.
By avoiding this 3 Common Blunders for a 1031 exchange into a
tenant in common property the investment will be a profitable
one. Ignore this piece of advice then beware of the "alligator
syndrome" (being eaten alive by hidden costs).
About the author:
Real estate investment specialist Francois Marin
http://www.howtofocuson.com
