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1031 Crowdfunding Scenarios

Common scenarios regarding real estate investing or 1031 exchanges.

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As you approach the 1031 exchange process, you may find yourself in several types of scenarios. Everyone’s situation is different, and you want to make sure you have the information you need to make successful and beneficial decisions.

Let’s take a closer look at some common scenarios regarding real estate investing or 1031 exchanges that you might find yourself in so you can know if 1031 Crowdfunding’s products and services are right for you.


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You’re Considering a 1031 Exchange

At some point on their journey with real estate investment, many people find themselves considering a 1031 exchange. You may need some outside help to determine how you should proceed.

You’ll need a qualified intermediary (QI) to help you through the process. They’ll come alongside you from the beginning and make sure every step happens as it needs to for you to make the most of your decision. If you’re considering a 1031 exchange, then your first order of business should be to get yourself a QI.


You’re Wondering if Your Property Qualifies for a 1031 Exchange

Another early situation you may find yourself in is wondering whether your property even qualifies for a 1031 exchange. The good news is if you own real property and use it for business, or you’re holding it for investment purposes, it can qualify for a 1031 exchange. Some common examples of qualifying properties include the following:

  • Apartment building
  • Commercial building
  • Vacant lot
  • Single-family residence

Like-kind properties can be any type of real property regardless of upgrades or improvements. The Internal Revenue Service (IRS) considers all real property to be like-kind to other property within the boundaries of the United States. Because all real property is like-kind, you can exchange any type of property for any other type. For example, you can replace an apartment building with an office building or a restaurant with a single-family home.

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You’re Frustrated with Being a Landlord

Whether you’re in the middle of your career or you’re nearing retirement, you may be feeling like it’s time to make a change. Being a landlord is tough work, and it can be stressful to maintain the level of productivity needed for success year after year.

Owning, operating and maintaining real estate properties demands a lot of effort and time. If you’re at the point where you want to spend more time with your family and friends, doing the activities you love, you may want to consider the passive benefits that 1031 Crowdfunding can provide.

You Want a Backup Strategy for Your 1031 Exchange 45-Day Deadline

You’ve started your 1031 exchange process and your 45-day deadline has started counting down. The clock is going to keep ticking, and you may be feeling the pressure to tie up your loose ends. As you navigate this potentially stressful situation, you may want a backup plan in case things go differently than you planned.

1031 Crowdfunding offers a backup plan. A Delaware Statutory Trust, or DST, is a solution to fall back on if your first option falls through. DSTs ensure all of your 1031 exchange funds are invested into a replacement property, allowing you to avoid capital gains taxes.

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You’re Planning for Your Heirs

You’ve put a lot of work into acquiring and maintaining your real estate properties, and now you’re thinking of the next generation. Multi-generational wealth is something you need to prepare for and consider. You need to equip whoever is the next person to manage your wealth with the tools for success.

In this situation, you’ll also have to consider your heir’s goals and needs. You may have enjoyed being directly involved with the management of your properties, but your heir may want to take a more passive, diversified approach. Talk to them and start planning the best way to transfer your wealth in a way that works for them. The answer could be one of 1031 Crowdfunding’s various offerings.

You’ve Inherited a New Investment Property

If you’ve inherited a real estate property and are looking for a way out of the management responsibilities, 1031 Crowdfunding may have a solution for you. If you choose to sell the property and invest in one of 1031 Crowdfunding’s offerings, you could enjoy the benefits of real estate investing while freeing yourself from the time-consuming responsibilities of real estate management.

You want to make sure that you do thorough due diligence before making any investment decision. You want to protect your equity and make sure it’s giving you an adequate return. After inheriting a new investment property, talk to one of 1031 Crowdfunding’s registered representatives to learn more about 1031 Crowdfunding’s investment options.


You’ve Become an Accredited Investor

To participate in the majority of 1031 Crowdfunding’s offerings, you need to be an accredited investor. An accredited investor is someone who has the financial ability to absorb losses and realistically take risks. As an individual, you must meet at least one of the following two requirements to hold this status:

  • An annual income of at least $200,000 or a joint income of at least $300,000 for the past two years with all signs pointing to a continuation of this level of income
  • A net worth that exceeds $1,000,000, not including the value of your primary residence

Investors who meet these requirements are typically also considered sophisticated, meaning they have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.


You Wish to Maximize Your Tax Benefits and Make the Most of Your Property Transactions

When you sell property, you need to pay capital gains taxes on any money you make on the transaction. Depending on the amount of your equity, this tax payment can be hefty. Participating in a 1031 exchange can help you avoid this tax payment, but you only have 45 days to identify a replacement property.

This route could help you to make the most of your property transactions. You want your investment wealth to continue paying dividends, and a 1031 exchange could be an option if you are looking to defer your capital gains taxes. Of course, you should speak to a tax professional to get more information on your unique situation before making your final decision.

Register Today to Get Help With These Scenarios

Wherever you are on your real estate investment journey, 1031 Crowdfunding is here to help. Through our offerings, investors are able to enjoy the benefits of owning real estate without having to put in the manual labor and stress of managing those properties. Create a free investor account today; we look forward to working together to help you reach your financial goals!

This material does not constitute an offer to sell or a solicitation of an offer to buy any security. An offer can only be made by a prospectus that contains more complete information on risks, management fees and other expenses. This literature must be accompanied by, and read in conjunction with, a prospectus or private placement memorandum to fully understand the implications and risks of the offering of securities to which it relates. As with all investing, investing in private placements are speculative in nature and involve a degree of risk, including loss of your principal. Past performance is not necessarily indicative of future results and forward-looking statements and projections are not guaranteed to achieve the results described and your actual returns may vary significantly. Investments in private placements are illiquid in nature and there may be no secondary market or ability to sell the investment should the need for liquidity arise. This material should not be construed as tax advice and you should consult with your tax advisor as individual tax situations will vary. Securities offered through Capulent, LLC Member FINRA, SIPC.

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