1031 Exchange (a tax code) is a vehicle used by the rich to get even richer. They avoid paying capital gains taxes after the sale of an income property now and use the full value of the sale price and apply it towards the purchase of a similar or higher valued property. Using all the proceeds plus more to move into the next bracket. From a condo to Single Family Home to Fourplex to 16-plex to 32-plex and so on. All the while not paying taxes so they can purchase bigger and bigger assets. This principal can apply toward any asset. Luxury Yachts for example.
A tax code made specifically for the Uber-Wealthy. You can take advantage as well……
This obviously is a complex vehicle which involves more than is described in the short description here. But more and more investors are using 1031 Exchanges to build wealth in the real estate industry.
With the correcting real estate market today, this is a fantastic opportunity for small time investors to make the move now when there is uncertainty. Opportunities are made in times of uncertainty and confusion.
New Home Builders are having difficult times completing their projects as many buyers who put down deposits a year ago are no longer able to qualify for the loan to complete the purchase. Cancellation rates are increasing for them but they have to move forward with completing their projects. They are having so much difficulty, now they are bringing in Real Estate Agents to put their uncompleted homes on the MLS. They are flooding the MLS with uncompleted condos and townhomes.
Basic economics tell us when supply (condos/townhomes) increases, demand (buyers) decreases. This is why the market correction is hitting that market harder than the Single Family market. Almost no new single family homes with 5000+ sf lots are being built in major cities in the Bay Area. Only things you see being built right now are condos and townhomes or single family homes with zero lots. Therefore, Single Family Homes with traditional lots (5000+ sf) are in high demand and the nice ones are still seeing multiple offers. Supply and Demand.
Perfect time to buy the B rated single family homes as they are not getting the love that every home once did. These will be rentals, so no need to go for the HGTV type of home.
Something that is good enough to rent and hold until the market gets hot again when another move can be made.
Although the purchase market is going through a correction, the rental market is super hot. Renting out a single family home in good condition will be no challenge. Opportunities are made in times of uncertainty and confusion.
This is a complex strategy but used by millions of investors. DM me to learn more or get a flyer explaining the particulars and how to do it. Knowledge is power.
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