Page 107 - AAGLA-APR 2022

and filed with a qualified intermediary. Often, the exchanger’s primary option won’t work out ...even if it looks like a sure thing! Also, I have often seen unscrupulous sellers exploit the buyer’s 45-day time clock to press their back against the wall, forcing the exchanger into an inferior negotiating position. Backup property options can strengthen the exchanger’s negotiating power by providing additional options.
For accredited investors, a DST can be an excellent option for a backup strategy. DST properties are already purchased, stabilized, and can potentially provide monthly distributions to investors. There is no negotiating, and the due diligence is already complete. Additionally, an exchanger can often close on a DST in three to five business days. I often recommend my clients use a DST as a backup ID if there is room in their exchange and it is appropriate for their situation.
Step 6: Make sure to start to negotiate a 1031 contingency in your purchase and sale agreement. Many buyers are willing to allow a 1031 contingency that will permit the seller to extend escrow on the property being sold if the seller can’t find a
replacement property. For example, try to negotiate a clause that extends escrow for you by including an additional 30 days if you are unable to identify a suitable replacement property. This can be a quick and easy way to buy additional time should you have difficulty locating the right 1031 exchange investment.
Here’s the Bottom Line: A 1031 exchange can be a potentially great tool for building and preserving wealth, but it can be a daunting process if not properly prepared. If you decide to do a 1031 exchange, make a point to start early, get educated, narrow down their options, line up financing, have a backup property identified, and negotiate for more time in case they need it. When appropriate and if you qualify as an accredited investor, use a DST as part of your 1031 exchange strategy. There are no guarantees in real estate, so it is always best to plan when considering a 1031 exchange.
Investors can view the Kay Properties & Investments online marketplace of current offerings on the at www.KayAAGLA. com.
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.
livable
APARTMENT AGE • APRIL 2022 107