1031 Exchange Challenges

[Anton Peterson]

Hey! I'm new to the 1031 exchange ecosystem and I'm looking to understand the most common pain points in the 1031 exchange process for investors. Due to the 45 day property identification requirement, I am wondering what the main challenges are and whether advisors, DST/TIC strategies, and 1031 facilitator services leave investors satisfied.

If you've been through the 1031 exchange process as an induvial investor, I'd love to hear about your experiences and the challenges that persist.

If you've been through the 1031 exchange as an advisor, what are some of the challenges you still face?

[Brandon Gale]

Biggest pain point is the pressure. You're in a weird scenario on the buying side when negotiating with a seller because you have to include in the offer and P&S that the purchase is part of an exchange so they know your clock is ticking. It takes away some of your negotiating power and may make you feel pressured to get a deal done that you shouldn't, just to save the taxes.

Obviously its ideal to have a property in mind or even an accepted offer before the closing date on your relinquished property, but that's easier said than done in many cases.

My biggest challenge by far was my qualified intermediary. They were horrible. Almost missed several deadlines and almost submitted closing disclosures that were done improperly and would have cost me 10's of thousands in taxes because they put everything (assuring meeting deadlines, and calculating all the correct numbers on the disclosures) on me. Find a good intermediary and don't go with one of the massive countrywide companies.