Why and When Would You Consider a Reverse 1031 Exchange?

Significant Changes in the Investment Real Estate Market

The investment real estate market has changed quite a bit over the last few months, especially in the residential real estate market segment. And, the commercial real estate market is beginning to demonstrate signs of slowing and price adjustments, the real estate investor must review their strategy when it comes to investing in investment or income properties.

Total real estate inventory listed in the real estate industry today has increased dramatically because real estate is taking much, much longer to market and subsequently close. Buyers are having extremely difficult times in obtaining, qualifying for and funding new debt. Credit and capital markets are beginning to normalize, but there is still quite a ways to go before it is considered normal> There has also been a tremendous increase in foreclosure, deed-in-lieu of foreclosure and short sale transaction activity.

Complicates the Planning, Structuring and Coordination of 1031 Exchanges

Real estate markets like this make planning and structuring 1031 exchanges even more difficult for the investment property owner.

Reverse 1031 Exchanges

The reverse 1031 exchange can put real estate investors back in the drivers seat of the real property transaction because he or she can take all the time they need to find the best and most suitable investment property and then acquire it first before the relinquished property has even been listed for sale.

The real estate investor then has 180 calendar days after they have found their new like-kind replacement property to market and sell their existing relinquished property. It is certainly a buyers market, but priced properly the property will move.

Increased Reverse 1031 Exchanges

We at The Exeter Learning Institute had expected to see a significant reduction in the number of reverse 1031 exchanges during 2008. The real property market would seem to favor selling first and then acquiring the like-kind replacement property via a forward 1031 exchange within the 1031 exchange deadlines.

However, we have been extremely pleases to actually see an increase in reverse 1031 exchanges due to the various problems within the credit, debt and capital markets. Buyers are facing difficult challenges in obtaining and qualifying for new debt and then closing on the relinquished properties and the real property owners are faced (forced) with the prospect of purchasing their replacement properties first or lose their investment property opportunity completely.

Reverse 1031 exchanges allow them to proceed with their replacement property purchase without losing their deposit, losing the income property opportunity, while still keeping the opportunity to defer the payment of their income taxes by using the reverse 1031 exchange.

Contact Information For Help

You can visit Exeter Reverse 1031 Exchange Services, LLC's website for more detailed and in depth information on reverse exchanges.

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You can also reach a senior executive of Exeter Reverse 1031 Exchange Services, LLC anytime you would like to speak to them - 24 hours a day, 7 days a week.