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1031 Crowdfunding: A Solution for Your 1031 Exchange - How it Works

1031 Crowdfunding seeks to offer a simple solution for 1031 exchangers by providing an online marketplace for real estate investors to find, view, and purchase available, investment-grade properties through Delaware Statutory Trusts (DSTs).

If you haven’t become a part of our crowd yet, you might wonder what that means and how that works. Let us explain.

Whether you have been through the 1031 exchange process before or are seeking to learn what is required, here is a summary; you must engage a qualified intermediary to process your transactions. You have to sell your relinquished property, and then identify candidate replacement property/ies within 45 days and acquire at least one of those properties within 180 days. Then you have the responsibility to manage and operate the replacement property to maintain its profitability. As you know, there can be many frustrating obstacles to overcome throughout this process.

That’s why we are here.

We take many of the steps in the 1031 exchange process off of your hands. When the obstacles appear, you don’t deal with them, we do.

Here is a step-by-step process of how a simplified 1031 exchange with 1031 Crowdfunding works:

Step 1:

Sponsors create 1031 exchange-qualified DSTs and acquire high-value, investment-grade real estate assets. Investors do not face competition for desirable properties. Investors do not have to rush to beat Identification or Exchange Period deadlines.

Step 2:

1031 Crowdfunding reviews qualifying DSTs and presents top-class DSTs on its platform. We strongly recommend that investors complete their due diligence efforts to ensure the quality of the candidate DSTs; however, we have already evaluated the DSTs on our platform through a strict due diligence process.

Step 3:

Investors join the crowd by creating an account on 1031Crowdfunding.com. Investors gain convenient access to complete details for a variety of DST listings.

Step 4:

Members browse available DSTs to find the property best suited for their needs. DSTs vary in debt levels, so investors are sure to find a property that satisfies their debt requirements. DST properties differ in property types, regions, and values to meet individual preferences and offer diversification options.

Step 5:

If needed, members contact 1031 Crowdfunding for assistance or answers to questions. The 1031 Crowdfunding team specializes in 1031 exchanges and DSTs. Investors receive the most complete and accurate information regarding exchange options.

Step 6:

Members complete electronic forms to purchase units of beneficial interest in their chosen DST. The property acquisition is processed at the investor’s convenience at the comfort of their personal computer. The investor maintains full control over their investment decisions. If conducting a 1031 exchange, the investor’s qualified intermediary wires the funds to complete the purchase.

Step 7:

As DST beneficiaries, members receive confirmation of the purchase, followed by regular updates and distributions. Expert DST officers and property managers operate and manage the property or portfolio. Investors enjoy the benefits of owning real estate without dealing with the day-to-day responsibilities of actively managing real estate.

Step 8:

DST managers sell the property at the designated time and distribute final proceeds. Investors are now in a position to defer capital gains taxes through a 1031 exchange by replacing this property with a new property. Proceeds are sent to qualified intermediaries of investors who intend to complete a 1031 exchange. Investors now have the option to find a replacement property through 1031 Crowdfunding or other sources.

While the information provided above has been researched and is thought to be reasonable and accurate, it's important to understand that all investments, including real estate, are speculative in nature and involve substantial risk of loss. Additionally, private placements of securities are not publicly traded, are subject to holding period requirements, and are intended only for accredited investors who do not require a liquid investment.

AUTHORIZED PARTNER

CrowdPay is an FDIC insured bank account that you can use to purchase investment opportunities. You fund your CrowdPay account by ACH or wire transfer. All future dividends, interest payments, as well as revenue sharing payments will be placed into your CrowdPay account. You have the option to transfer funds into the account, withdraw funds from the account, or purchase additional assets at any time.

The account is held by GoldStar Trust Company, a trust only branch of Happy State Bank, and cash that accumulates in your new CrowdPay account is FDIC insured. Please follow the below link for additional important information regarding your CrowdPay account.

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