“Hello Gary… We’re interested in selling our investment properties. We like the 1031 exchange concept. However, we are scared off by the 45 day identification process.”
***ANSWER:
I understand the hesitation due to the 45-day period you have from closing your sale to “identify” the property(s) you want to buy. While everyone has this same time period, it goes quickly if you don’t plan ahead.
Here are steps to help you in effect s-t-r-e-t-c-h that 45 days so you have plenty of time and can go at a more comfortable pace:
1. Before you list your property, get a clear picture of what you want to buy. Investigate different options and decide which one(s) you want to pursue. Do you want a house, condo, apartments, T.I.C., etc.? Do you want to buy local or out of state? You should also get prequalified or pre-approved with a reputable lender.
2. Get familiar with that market and the available inventory of properties to buy. Do some “window-shopping” so you’re already “in the market” before you even list your property for sale.
3. Now list your property for sale. And the minute you accept an offer, start looking for the specific property(s) to buy. You may have already found a few while window-shopping that are still available now.
4. Make an offer contingent on the closing of your property. While sellers don’t love contingencies, they’re much more open to a contingency on closing an escrow than if your property isn’t in escrow or even on the market.
As you can see, if you do it right, you can stretch that 45-days into 60, 90, even 120 days or more.
