1031 Exchange: New Blunders to Avoid

A 1031 exchange can be a wise investment. It can also turn into a nightmare. Common mistakes exist.

(PRWEB) January 30, 2006 -- 1031: Alligator Blunder:

There are 3 major Blunders that can turn an investment into a nightmare. It is one’s duty to avoid these at all costs when contemplating a 1031 exchange.

Blunder #1: Dealing with a non specialized company that does not know what it really does. Check their history of TIC offerings, ask for referrals from satisfied clients. Ideally, they should only be doing this kind of transactions. Are all their properties "top of the range" commercial buildings or not ? Ask how they get listings and what are their criteria to select them. Quality properties are hard to find and sell out quickly. In real estate, quality properties remain always desirable - low ones lag.

Blunder #2: Choosing an Accommodator that has not done many, many of these transactions. This Qualified Intermediary are here to make sure all the documents and money transfers meet IRS guidelines. They are the one that will set up your LLC. Using an Accomodator with whom one has already a relationship, like a family attorney or estate planning attorney is a Blunder because they may not qualify. Do not forget, in case of bad paperwork, the IRS might send a nice bill for taxes or penalties. As bad, the whole transaction can fall through due to an incompetent or inexperienced Accommodator.

Blunder #3: Negotiating too hard on the property management company. These people are extremely important to the performance of the investment. The investor heavily depends on them to handle the day to day problems, carry the proper insurance, keep the building without vacancies, in nice condition and pay the property taxes on time.

By avoiding this 3 Common Blunders for a 1031 exchange into a tenant in common property the investment will be a profitable one. Ignore this piece of advice then beware of the "alligator syndrome" (being eaten alive by hidden costs).

Francois Marin
http://www.howtofocuson.com

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