Today we’re asking the question, “Is a 1031 exchange for you?”
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We’ve been getting into the nitty-gritty where you love to be on 1031 exchanges. Bob, let’s talk a little about how you approach it and what you do and when you use this tool from your tool belt in investment real estate.
Bob Nelson: Well first of all, if a person approached me and stated, “I’m about ready to sell something and I’d like to know if a 1031 would be beneficial.” Do understand I’m not a CPA, I’m not a tax attorney, but I’ve done this stuff for 51 years. I’ve worked with the very best people. I do understand the rules and I understand what the CPA would ask you or a tax attorney, “How much taxable gain would you have if you sold a property?” So identify, first of all, do you have sufficient gain to go through the process?
Marcia Edwards: This, I want to suggest, is a phone call to you, Bob. Right?
Bob Nelson: It could be a phone call. Sure.
Marcia Edwards: You’re really generous with information and I want people to know that.
Bob Nelson: Sometimes it saves a lot of time for both the potential client and for me because rather than get together for an hour to answer a two minute question or a thirty second question, why don’t we get to the issue of concern? Then we can identify what are the real problems as opposed to just informational type gathering and sharing.
Marcia Edwards: I would encourage you to reach out to Bob if this is a consideration for you, just as a possibility. It’s probably a free phone call, the inquiry, correct?
Bob Nelson: Yeah.
Marcia Edwards: Okay, so clearly understand your investment plan, understand your end game and how you’re going to, what the strategies are along the way is a big part of this, right?
Bob Nelson: Well, yes. For instance, if you’re in the first formative years of your investment portfolio, the next transaction that you do is not probably your terminal one, the one that you’re going to own forever and ever. You approach it that way, which is fine. That’s the way it should be done.
That’s a serious situation, but do recognize that the typical holding period for a parcel of property is probably somewhere around five years, five to six to seven years or so, and then you tend to outgrow it. What happens, it becomes more valuable, you have a larger and larger equity and you start to then realize, “With that much equity, I could be owning something that’s much different.” Potentially much bigger, easier to manage, whatever it would be, and that causes you to start thinking in terms of adjusting to another type of property.
Marcia Edwards: Once you’ve looked at the macro, you break it down to just what you’re going to do this year.
Bob Nelson: Exactly.
Marcia Edwards: You can call Bob to talk about that.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.