How to Use a 1031 Exchange to Buy an Investment Property

You may have heard of someone who used a 1031 Exchange to purchase a property. They are used for investment properties and it will help you avoid having to pay immediate capital gains taxes on the sale of an investment property. So how does it work and could it work for you?

What is a 1031 Tax-Deferred Exchange?

How to Use a 1031 Exchange to Buy an Investment PropertyInternal Revenue Code, Title 26, Section 1031 says: “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.”

That means it allows a tax deferred exchange of like-kind properties along with cash, liabilities and property. All kinds of entities can take advantage of it, individuals, C corporations, S Corporations, partnerships (general or limited) limited liability companies, trusts and any other taxpaying entities.

Like-kind relates to use:

Like-kind relates to the use of properties, and that means that the old and new properties must be held as an investment or used in a business. Vacant land is always considered as qualifying for 1031, but “flip” properties and primary residences don’t qualify. While investments are eventually going to be sold, a 1031 requires a two year holding period.

No extensions allowed:

The new property must be identified within 45 days of the closing of the sale of the old property and there are no extensions. The 200% rule requires that the total value of all of the properties that you are identifying to be less than double the value of the property that you sold. The closing on the new property must take place within 180 days of the closing on the old property. Again, there are no extensions for any reason. The money from the sale of the old property can’t be touched by the seller either. A Qualified Intermediary is required to hold it for the seller until closing on the new property. Also everyone listed on the title to the old property has to be listed on the new one as well and the new property has to be the same price as or a higher price than the old one.

As a Real Estate Seller Should You be Offended by a Low Ball Offer?

You’ve been house hunting for the perfect piece of real estate. Your dream home keeps slipping through your fingers. Why? Low ball offers. You keep making them, your Realtor lets you, and sellers keep rejecting them. If you’re a seller, getting a lowball offer on your property can really be an insult, right? Maybe not. So whether giving or receiving a lowball offer, should it be a habit your Realtor allows?

What about your Realtor?

As a professional, a Realtor should be advising you, whether a buyer or seller, to do things that are in your best interest. They are there as a professional in YOUR corner. They should always act like a professional. So if you are selling your home, what should you do if you receive a lowball offer?

Low Ball Offers

First, keep in mind that your Realtor is ethically bound to bring every off that is made for your property to your attention. They can’t accept or reject an offer without your say so. So don’t get mad at As a Real Estate Seller Should You be Offended by a Low Ball Offer? them for bringing it to you. Next, think of a lowball offer as a starting point in negotiating a deal for your property. If your Realtor has any skills, they can negotiate it up to an acceptable level for you. So unless it is so low that it is ridiculous, don’t reject a low offer out of hand. Counter with one that is much closer to your asking price and see what happens.

Lowball offers can also be a sign that you might have overpriced your home, or that there may be items that if you fixed them, you’d get higher offers. Discuss this possibility with your Realtor as well, unless they already told you that, then take their advice and fix things!

Lowball offers can be a sign of a bad buyer, someone who isn’t working in good faith. Your realtor can be a good judge of whether this is the case or not.

Remember to take their professional advice, be competitive, do your homework and check list to sold prices on past sales. This will tell you if the offer is competitive or not. Mostly, rely on the professional Realtor you hired to help you.

How to Profit by Turning Your Home into an Executive Rental

You can profit by turning your home into an executive rental if you are willing to do a little work or make an investment of some money in it.

How to Profit by Turning Your Home into an Executive RentalYou have a property and you know you’ve been underwater on it. So do you walk away? Well, you could, but that would trash your credit rating. You may just want to consider making it an executive rental. It could be the answer to waiting out being underwater and how to make a profit in the meantime.

When the real estate bubble burst in 2008 many, many properties all of a sudden were worth a fraction of their former worth, and very often less than the mortgages that were on them. Property values were slow to come back, and in many areas haven’t come close to their pre-crash values. So if you own one of these properties, it’s tempting to walk away. Another answer can be to move into another area, rent out your home and wait the market out. Renting it out as an executive rental will mean you can demand more rent and stay ahead of the game.

Of course this might mean you need to invest some money into the property. Executive properties are more upscale. They have luxury amenities: granite, stainless steel, spacious and well-appointed rooms and bathrooms. Why, you’re thinking, would I throw good money after bad? Well, people renting executive properties know they will have to pay more to have a home that is guaranteed to be high quality. Also keep in mind that making those improvements also means your property value rises.

As an executive rental it will be much better cared for by your tenants. Executive tenants expect a certain level of quality; they are more apt to take care of it. A rental property well maintained means that you can either easily sell it later once values have risen to a point where you aren’t underwater any longer.

So don’t walk away from your underwater home, leverage it into a great asset.

Luxury Rental Property – Why it is Vital to Use an Executive Property Management Company

You have a luxury rental property and have decided to list it to rent. Congratulations! So do you do it yourself? Hire a realtor? Hire an executive property management company? The last is the best choice and here are several reasons why.

Luxury Rental Property - Why it is Vital to Use an Executive Property Management CompanyUsing an executive property management company for your luxury property means that you will be able to rent your property at a higher purchase price point, have your potential tenants screened and background checked, make sure the property is maintained as the luxury rental property that it is and protect your investment. Quality executive property management companies have a good solid list of people who are able and willing to rent. That means shorter listing periods and consistent rental income.

What to look for in an executive property management company

When looking for a good, quality company, look for one that has a healthy number of properties being managed. Find one that has certain types of businesses on call or on retainer: a reputable attorney; a marketing company; and a professional photographer who will capture every property they manage at its best. A good executive property management company will make sure that your property is listed at its best rental price; advertised in the best places to attract the best tenants; provide thorough background checks on prospective tenants; make sure the property is cleaned before and after each tenant; and protect your privacy by handling all the details and payments for you.

Don’t use just any management company

Why chance it? Using just any property management company might mean your luxury rental property is damaged or is not maintained. It does make a difference. An executive property management company will save you the headaches of being a landlord. Given the amount of value you place on your home, spending a little more now will mean you save in the long run. Why chance poorly done repairs, little maintenance or chasing down deadbeat tenants? Put your trust and your property in the hands of an executive property management company like Denver Realty and Rentals!

Call today for a free quote on your executive rental listing! 303-452-5853

Bad Listing Photos – Why Some Realtors Are Missing the Boat

Bad listing photos are why some realtors are missing the boat and not selling the property. Have you ever seen a listing for a home where the picture was dark, or out of focus or just bad in any other way? Did you look at the property or skip to the next one? Skipped it if you’re like most people. Bad listing photos are one way to ensure that a listing goes unnoticed.

Bad Listing Photos - Why Some Realtors Are Missing the Boat If you are listing your home for sale or rent, please be sure that your realtor gets really good pictures of the home, inside and out. People today look online for homes long before they ever call or email a realtor to look at a property. Bad photos mean no one will come looking. Having good photos means that a listing will be viewed by 600% meaning that the National Association of Realtors, sites like Zillow, Realtor.com and Trulia often will turn up more results, if they can show the key features of a home before physically going there with a prospect.

So how can you do this? First, use a really good camera. Either an actual camera or a high pixel cell phone camera. Make sure the lighting is adequate, use natural lighting if you can, but don’t be afraid to turn on all the lights if needed to get the best shot. Also, take more than you think you need. That way there are many to choose from to put online. Overselling isn’t a problem, underselling is. Work with your realtor to be sure you get pictures of the amenities that will really sell your home. They know what is important in a sale and what isn’t. You may be really proud of the cute nursery mural, but that might not be the best picture to put up! In fact, take a picture of it, and then paint over it!

Listing photos can be the reason that some realtors are missing the boat on selling a property or, they could be the good reason the property sells. Make sure your realtor doesn’t use bad listing photos!

Looking for a GREAT Denver Realtor who has a professional photographer for EVERY listing? Give Tena D. a call today! 303-452-5853