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Another Directly Owned Property
Some investors want to continue owning real estate directly but may prefer a different asset type, geographic market, management structure, or investment profile.
1031 Replacement Property Solutions for Real Estate Investors
Finding the right replacement property is one of the most important decisions in a 1031 exchange.
Customized 1031 helps real estate investors evaluate replacement property solutions based on their investment goals, ownership preferences, and plans for the equity coming out of their current property.
Whether you intend to remain an active real estate owner or are considering a more passive approach, Doug Zator can help you understand the options available for your next investment.
Finding the Right 1031 Replacement Property
A successful replacement property strategy begins with more than finding real estate that can satisfy the requirements of an exchange.
It begins with deciding what you want your next investment to accomplish.
For some investors, that means acquiring another property and continuing to manage real estate directly. For others, selling an appreciated property creates an opportunity to reconsider how much time, responsibility, and concentration they want tied to a single investment.
Customized 1031 helps you evaluate the next step in the context of your broader investment goals.
Replacement Property Solutions Built Around Your Goals
Investors come to 1031 exchanges with different properties and different priorities.
Your replacement property strategy may be influenced by considerations such as:
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Desired level of property management responsibility
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Investment income objectives
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Property type and market exposure
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Diversification
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Financing and debt considerations
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Investment time horizon
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Liquidity considerations
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Long-term real estate and retirement goals
Understanding those priorities early can make it easier to focus on replacement options that warrant further consideration.
REPLACEMENT PROPERTY STRATEGIES
Your Next Investment Does Not Have to Look Like the Property You Sold
Selling investment real estate can provide an opportunity to rethink how you want to own real estate going forward.
Depending on your circumstances, you may be considering:
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Multiple Real Estate Investments
Rather than concentrating exchange proceeds into one replacement property, some investors may want to evaluate a strategy involving multiple qualifying replacement investments.
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Professionally Managed Real Estate
Investors who want continued real estate exposure without the same level of direct management responsibility may consider professionally managed real estate structures, including Delaware Statutory Trusts where appropriate.
The objective is to understand the differences between these approaches before deciding where your exchange proceeds should go.
Considering a DST as Replacement Property?
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For accredited investors seeking an alternative to purchasing and managing another property individually, a Delaware Statutory Trust may be one option to evaluate.
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Certain properly structured DST interests may be eligible for use as replacement property in a 1031 exchange. DSTs can provide access to professionally managed real estate, but they also involve investment risks and important considerations related to fees, financing, liquidity, sponsors, and the underlying properties.
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Doug can help you evaluate DST opportunities in the context of your overall replacement property strategy rather than viewing the DST as a one-size-fits-all solution.
When the Replacement Property Search Becomes the Challenge
Many investors know they want to complete a 1031 exchange before they know exactly what they want to own next.
You may be facing that situation if:
- 01 Your property is already under contract
- 02 You have not identified a suitable replacement property
- 03 You no longer want another actively managed property
- 04 Available properties do not fit your investment criteria
- 05 You want to explore alternatives before making another direct acquisition
- 06 Your priorities have changed since purchasing the property you are selling
The earlier those questions are addressed, the more opportunity you have to evaluate potential strategies before exchange deadlines begin limiting your choices.
How Customized 1031 Helps Investors Evaluate Replacement Property
Doug takes a personalized approach to the replacement property conversation.
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Understand What You Want Next
The process begins with your current property, your exchange, and what you want your real estate equity to accomplish going forward.
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Review Potential Strategies
Doug helps you compare replacement property approaches and understand how different options may relate to your objectives.
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Evaluate Investment Opportunities
Where professionally managed real estate investments are being considered, Doug helps investors review the opportunity within the context of their broader strategy and risk considerations.
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Coordinate the Investment Side of the Exchange
Customized 1031 can work alongside your Qualified Intermediary, CPA, attorney, broker, and other professionals while focusing on the replacement property and investment decision.