Many investors recoil at the thought of selling a piece of investment property. And they usually have a good reason, whether it’s missing out on future appreciation, having to pay a massive tax bill or some other factor.
Yet it can often make good sense to sell your property, thanks to a real estate investment alternative that simplifies your life and lets you defer the taxes via a 1031 exchange.
Let’s take a look at six reasons you might want to consider selling and reinvesting in this alternative…
Reason #1: You’re sick and tired of having to actively manage your real estate.
Let’s face it, managing your real estate is often a real hassle. You have to keep your eye on the ball 24 hours a day, seven days a week. And dealing with tenants, toilets and trash just gets old after a while.
Sometimes even the sound of a ringing phone can fill you with dread. Sure, you can use a property management company to handle many of the details, but they come with their own set of hassles and can cost you a big chunk of your rental income. But imagine if you could continue investing in real estate while eliminating all those hassles and costs.
The good news, you can. How? By investing fractionally in a carefully selected portfolio of income-producing investment real estate that you don’t have to manage or have someone else manage.
Instead, you can just relax and enjoy your life while somebody else does all the worrying and deals with all the hassles. I’ll tell you more about the alternative that lets you do that in a moment, but first let’s look at …
Reason #2: You can take advantage of passive real estate investing for continued income with no management responsibilities
When you invest in real estate the way I’m going to show you, you’ll be a true passive investor.
You quite literally won’t have a single responsibility when it comes to managing your property, nor will you have to worry about any of the day-to-day hassles. They’re now somebody else’s problem.
And that means you’ll have more time and more energy for your family, your friends and your hobbies. Better yet, you’ll feel better thanks to the reduced stress and you’ll be more fun to be around.
Reason #3: You can realize the value of your real estate now instead of later.
Many investors I talk to like the idea of selling their investment property and realizing its value.
However, they don’t want to pay the taxes, nor do they want to spend the time and effort needed to find a new piece of property to roll their money into.
Those are two of the things that make fractional investing in a portfolio of real estate so attractive. You don’t have to spend a lot of time searching for a new property — it’s all done for you. Better yet, by reinvesting your money with a tax-deferred 1031 exchange, you can move on with your life.
Reason #4: You can quickly and easily become more diversified
Imagine if you could easily spread your real estate investments into different types and sizes of property in variety of geographical areas.
You’d have instant diversification which many investors value, especially in these uncertain times.
That’s the nice thing about the fractional real estate investments I’m going to tell you about in a moment. They’re stand-alone real estate investments in a variety of places. And we’ll help you choose the properties that works best for you.
Reason #5: You get the opportunity to invest in larger real estate deals
One of the nicest things about fractional ownership of real estate is that you can, if you wish, get pieces of larger real estate deals than you do now.
Maybe you like the prospects for a certain type of real estate — but thought it was out of reach because of the size of the required investment. But now, with fractional ownership, you can get a piece of just about any type of real estate investment you like, no matter how big. And I’ll show you how in just a moment.
Reason #6: You can use a 1031 exchange to defer the taxes when you sell your property
Occasionally, the tax code actually makes sense. And one of those occasions is with 1031 exchanges, which allows you to sell a property at a hefty profit and defer the taxes when you move your money into a “like-kind” property.
Most investors consider “like-kind” to be an imposing limitation, but the fact is, the rules are less rigid than you might think. For example, moving from an apartment building into a piece of raw land might not seem a “like-kind” exchange, but the rules allow it.
However, there are time limitations that must be followed to the letter. For example, you have to identify a replacement property within 45 days of the day you sell your property. And you have to close on a new real estate investment within 180 days of selling your property.
It generally makes sense to work with a specialist in 1031 exchanges to make sure you stay within the IRS’s rules, and that your transaction is completed on time.
You have the opportunity to make fractional investments in these properties. This real estate allows you to invest passively without any of the responsibilities of active management. It also lets you diversify your real estate portfolio far beyond what you’re doing now. And you can defer the taxes on any properties you sell.
For more information on how 1031 exchanges work and your available investment options, please visit www.kpi1031.com. When you register, you’ll receive a free book on 1031 exchanges and DST properties. You’ll also find valuable information as you decide what the right strategy is for your specific 1031 exchange.
Jason Salmon is Senior Vice President and the Kay Properties & Investments Team.
Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay’s clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market. Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over 15 Billion of DST 1031 investments.
This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through Growth Capital Services, member FINRA, SIPC, Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104.