Welcome to Universal Wealth Creation.com

This site have been developed as a resource for people

searching for the best ways to create wealth and increase the

quality of their lives. Inside you will find reviews of the latest

Investment strategies available.

Wealth Creation

Home Page

FINANCE SITES

AFR
AFR BOSS

AFR Photos

Asset

BRW

CFO

Fairfax Photos

Fairfax Research

Leverage

MIS

MoneyManager

Personal Investor

Shares

Tradingroom

Business & Finance Articles

3 Mistakes to Absolutely Avoid in a 1031/TIC Exchange
By: Paula Straub

We've all made bad decisions in the past.
Don't you just hate to hear "I told you so" from your friends and family? Or, maybe you catch yourself saying "If only I'd have..."?

Personally, I'm one of those people who prefers to learn from someone else's mistakes. If you're at all like me, and you have thought about doing a 1031 exchange into a tenant in common (TIC) property, take note. You can avoid making the 3 Major Mistakes that others wished they knew before leaping from the frying pan into the fire!

Before I let you in on the secrets, let me briefly explain what a 1031 exchange into a tenant in common property is. It's a fairly well-kept secret in and of itself.

A 1031 exchange is when an investment property owner sells his current property and exchanges it for a "like-kind" property of equal or greater value. By doing so, he defers the payment of capital gains tax and the consequences of recaptured depreciation.

By exchanging into a tenant in common property, or a TIC, he becomes a part owner of a large commercial property managed by professionals, who in turn pay him a monthly income. It comes with fewer strings than private annuity trusts, charitable remainder trusts, or an exchange into another property that still needs
your attention and often drains your wallet. I find that very few individuals, CPA's, attorneys, or even financial advisors are sufficiently well versed in the 1031 exchange into a tenant in common property. It can be a terrific deal!

Those who benefit most from this type of an exchange usually have several things in common.
1. They own investment property that has appreciated significantly in value.
2. They are tired of all the hassles of property management.
3. They don't want to pay huge amounts of capital gains tax if they sell.
4. They would like to have a significant increase in monthly passive income.
5. And, lastly, they still enjoy the relative stability of owning real estate.

Know of anyone who fits this description? If so, read on.

There are 3 Major Mistakes that can turn your investment into a nightmare. So, avoid these at all costs when contemplating this type of exchange.

Mistake #1: Dealing with an investment company that does not have their act together. If they seem like they don't know what they are doing, run! Look into their history of TIC offerings, and ask for referrals from satisfied clients. Ideally, this should be their only business. Are all their properties "A" grade commercial buildings, or are they somewhat less desirable? Ask how they find the properties and what criteria they use to select them. Quality properties are hard to find and sell out quickly. In real estate, the quality properties will remain more desirable, even when the mediocre properties start to lag. Ask yourself if you would like to have your office in that building, or go to see your doctor there, or if you'd shop in that strip mall.

Note: Also be cautious going the private route and getting into Limited Partnerships when only one or two major players make all the decisions. And, unless you have extensive experience in commercial property, don't get together a bunch of your friends and choose this property on your own.

Mistake #2: Choosing an Accommodator that has not done many, many of these transactions. This Qualified Intermediary makes sure all the documents and money transfers meet all the IRS guidelines. They will set up your LLC. You must use an Accomodator that you don't already have a relationship with. Your family attorney or estate planning attorney may not qualify. The last thing you want is the IRS sending you a hefty bill for taxes or penalties, or the whole transaction falling through due to an incompetent or inexperienced Accommodator!

Mistake #3: Skimping on the property management company. They are extremely crucial to the performance of your investment. You will be depending on them to handle the day to day problems that arise, carry the proper insurance, pay the property taxes on time, and keep your building fully occupied and in tip top shape. This company should offer you a long term triple net lease that has your annual income percentages spelled out, along with scheduled increases. There aren't
many out there willing or able to do this. Ask for an accounting of their track record with other properties, how long they've been in business and for a list of any judgments brought against them. See if they've ever requested special assessments, or had any foreclosures. A good management company is worth its weight in gold. You want them to make a tidy profit, because their performance is directly related to your investment stability.

Well, there you have it. Don't be "Penny wise and Pound Foolish". This is one time that hiring the best will definitely bring you the most favorable results. It should truly be a win-win situation for everyone involved.

By avoiding the 3 Major Mistakes for a 1031 exchange into a tenant in common property, you will be the one saying "I told you so" as you collect your monthly check
and watch your investment grow!

About the author:
Paula Straub is a Financial Advisor, Insurance Agent and Mortgage Loan Originator in San Diego, CA.
She'll teach you how to save thousands in Capital Gains Tax in a free teleconference . Visit the link:
http://www.savegainstax.com

Circulated by Article Emporium

http://www.universalwealthcreation.com Wealth Creation | Financial Wealth

Copying or republishing this article is permitted with this footer included

Collect a Free 260 page ebook here: Universal Wealth Earn up to $1,000 per referral: Wealth Creation Affiliate

These property, finance, stock market & business articles have been supplied in the interest of Universal Wealth Creations visitors who want to expand their knowledge in the wealth creation & investment fields. All the business, finance, stock market & business articles have not been read as they are submitted remotely, so if you find any questionable facts in here or simply do not like it, please email webmaster@universalwealthcreation.com and we will review the material. As we find time to do so, we will go through all articles and remove any that appear not suitable. Other sites we recommend here at Universal Wealth Creation are: 21st Century Academy with Jamie McIntyre, Investor Finance, Universal Trading Solutions which promotes great wealth creators like: Kim Reilly, Simon Martin, Justin Beeton, Louise Bedford, John Kaye, Daniel Kertcher & more. They run great seminars across the country. At times we will publish dates for these seminars as they are made available around the counrty. Meanwhile, there is a great opportunity to learn about the finance, stock market & property investment field through reading these kind of articles. Learn about share trading, options, futures, CFD's, derivatives, warrants, indices & more in the stock market. You will also learn plenty about business, finance & property investing through authors opinions in the marketplace. Enjoy your journey towards financial freedom. We hope you will enjoy your visit.

Regards Sean Rasmussen - Universal Wealth Creation Pty Ltd

Site Map

Return to Index
Return To Universal Wealth Creation Home Page

Business & Finance articles