By Jason Salmon, Senior Vice President, Kay Properties & Investments
Many investors recoil at the thought of selling an 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 other factors. However, 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 using a 1031 exchange. So, let us take a look at six reasons you may wish to consider when selling and reinvesting in this alternative.
Reason 1: You’re Sick and Tired of Actively Managing Your Investment Property
Let us face it, managing 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, stopped-up 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 hire 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. You may ask, how? By investing fractionally in a carefully selected portfolio of income-producing investment real estate that you do not have to manage or have someone else manage for you. 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 the next reason.
Reason 2: You Can Take Advantage of Passive Real Estate Investing for Continued Income With No Need for Management Responsibilities
When you invest in real estate the way I am about to show you, you will be a true passive investor. You quite literally will not 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. There is now somebody else’s problem. And that means you will 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 with like the idea of selling an investment property and realizing its value. However, they do not 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 do not 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 would have instant diversification which many investors value, especially in these uncertain times. That is a nice thing about the fractional real estate investments that I am going to tell you about in a moment. They are stand-alone real estate investments in a variety of places. And we will 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 will 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 then you must 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 Internal Revenue Service rules, and that your transaction is completed on time.
Find the Properties That Fit Your Investment Objectives
Kay Properties and Investments specializes in 1031 exchanges and we will work with you to find the property or properties that fit your objectives as an investor. We also offer you 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 are doing now, and you can defer the taxes on any properties you sell.
Please contact Kay Properties and Investments to get a better understanding of how you can utilize the 1031 exchange to get all these benefits and more. For more information on how 1031 exchanges work and your available investment options, please visit www.kpi1031.com. When you register, you will receive a free book on 1031 exchanges and Delaware Statutory Trust properties. You will also find valuable information as you decide what the right strategy is for your specific 1031 exchange.
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. 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. For a look at the types of DST properties investors are using for estate planning purposes please visit the Kay Properties marketplace at www.kpi1031.com. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security.