1031 Exchange, Hold or Refinance

[Cheryl Jones]

When it comes to these options, I think it really depends on the current real estate market.  When I did my first 1031 exchange it was a good real estate market.  Prices were not too high, but real estate was moving just fast enough where you knew you better buy before the deal was gone.  I also, of course, did not want to add to my tax burden which at that time was already in the 30% bracket.

Holding onto real estate just means you've decided to weather the bull and bear market of real estate.  Either you live on the property or you rent it out.  Which ever you choose, maintenance and taxes will keep adding up.

Refinancing can be very tricky.  I would be very cautious when refinancing.  The more you take advantage of your real estate asset, the more fees, taxes and time you add to that real estate.  What started out as $65,000 in equity, can dwindle down to $0 equity and double the payment very quickly.  On top of that, you now have twice as many years to make the payments.  You gotta ask yourself, did I really need to buy more real estate at this time in my life and was this the BEST place to buy it.  Location, location, location.  And by all means, do not use your equity to buy toys like quads, or boats, or motorcycles! 

Think seriously about your real estate and don't make hasty decisions.