1031 Exchange
1031 EXCHANGE
FOR APARTMENT
INVESTMENTS
An exchange is rarely a swap of properties between two parties. 1031 Exchanges are not exchanges in the context of a two-party barter. A properly structured 1031 ‘Like-Kind’ Exchange allows an investor to sell a property, to reinvest the proceeds in a new property, and to defer all capital gain taxes.
Popular strategies include exchanging a smaller apartment building into a larger apartment complex. Another is to exchange an apartment building into a net-leased or other passive investment.
Benefits of the 1031 Exchange:
Leverage
Through property appreciation and funds saved by deferring capital gains, investors can increase funds available for the purchase of a larger property.
Diversification
Investors can expand their portfolio by purchasing a variety of different product types (retail, office, net-leased); often purchasing multiple properties in several markets throughout the country.
Consolidation
Investors can sell smaller properties and purchase one larger property to maximize economy-of-scale benefits along with minimizing management responsibilities.
Increase Cash Flow
Investors can sell a property that is producing little or no income (raw land or smaller income property), and purchase a property that allows for greater cash flow performance.
Management Relief
Investors owning several rental properties are often faced with the burdens of intensive management and costly maintenance issues. Investors with high-maintenance and management-intensive properties can reinvest into properties requiring little or no management.
Increase Depreciation
Investors can exchange from a non-depreciable property (such as raw land) or fully depreciated assets into an income-producing property that can be depreciated.
4 Tips to Selling your
Apartment Building
Sell your apartment building with our top four tips on establishing a pricing strategy, understanding investors, marketing your property, and how to find the right commercial real estate agent for you.
- Establish a pricing strategy
- Understand investors’ points of interest
- Marketing your property
- Much more!
