Today we’re going to talk about the 1031 exchange.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: We’ve been talking about the 1031 exchange. That’s an opportunity where you have investment real estate and you want to move the money, the investment to another piece of investment real estate. We could talk more in details, but the 1031 exchange is actually Bob Nelson’s wheelhouse. It’s where he spent his career and we want to pick his brain while you’re here, Bob, to talk a little bit about ideas and strategies in the deferral.
Bob Nelson: Well, it’s an interesting process because you do have the opportunity, as an example a little bit of strategizing. If I had one property and I wanted to acquire instead of one, two, I can exchange one parcel of property. I can sell one property, acquire two replacement properties, and if that was to my advantage and benefit, that’s exactly what I would do. Why would I do that? Maybe I’ve got two kids and I would like to set up the distribution of the estate and it’s not going to be easy to chop one large piece of property into two parcels, so there we go. We’ll go into two, with one each with the concept.
Marcia Edwards: There’s some other concepts that I think are interesting to me, and there’s edges and ways to look at it given your circumstance. You’ll want to find out from Bob specifically on your circumstance, but generally speaking there is a forward and reverse exchange, correct?
Bob Nelson: Yes. The forward exchange is the one that you would normally think of. I’m going to sell a property and then I’m going to acquire the replacement properties. A reverse exchange, I’ve found the replacement property that I’m really after, but unfortunately I haven’t sold the one that I currently own, so I could acquire the replacement property and then sell the one that I’m going out of. It’s called a reverse exchange. You do have to use the exchange facilitator, it’s a called a little different title, an exchange accommodation titleholder, but it’s still an exchange facilitator, for all intents and purposes.
Marcia Edwards: So it seems like if you’re concerned about finding a property that you could do the reverse exchange in this kind of market?
Bob Nelson: Yes, absolutely. I’ve completed several of them this year. They’re complex. You don’t step into them by accident. I mean, it might be an accident somehow or another, but it takes planning, but fairly easily done as long as you’ve got the strategy in mind.
Marcia Edwards: There’s more opportunities in the terms, like like-kind exchange, having a venture partner, we’ll talk more on the exchange next program.
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 5:30 on KPNW for the “Real Estate Today” radio show.