David Moore, 1031 expert and CEO Equity Advantage, explores the compelling story of a client who transformed years-old inherited land into a thriving investment opportunity, showcasing the power of strategic planning and informed decision-making.
The Background
The story begins with a client who inherited a piece of land some years ago. This land was not generating any income and was essentially sitting idle. As she prepared to move to Oregon, she began to explore options that could provide her with a more fruitful investment opportunity. She started looking at attractive rental properties that could serve her needs.
The Challenge
When clients look at high-value rental properties, it often indicates that they do not intend to hold onto these investments indefinitely. The client was interested in properties that would serve both as a primary residence and an investment. The initial selling price of her land investment of $230,000 with a low basis posed a challenge, as it wouldn’t stretch far in the current market.
Exploring Options
During the consultation, various strategies were considered to maximize her investment potential:
- Mixed-Use Property: One option was to purchase a mixed-use property that included a primary residence along with an adjacent garage and apartment. This would allow her to utilize the rental income from the outbuilding.
- Investment First: Another strategy was to buy a property purely as an investment, hold it for a year, and then move into it later. This option could provide her with flexibility in her living situation.
The Decision
Ultimately, the client opted against the mixed-use property due to her desire to avoid the complexities of property seasoning and her inability to find a property that met all her needs. Instead, she decided to purchase a new single-family rental and a home that suited her lifestyle.
Key Takeaways
This case illustrates the importance of exploring all available options before making a decision. It’s crucial not to rush the process, especially with a 1031 Exchange, which has been a part of tax law for over a century. Many clients still reach out after their transactions have closed, seeking guidance, and are disappointed to discover they have missed opportunities.
- Start Early: Don’t leave decisions until the eleventh hour. Planning well in advance can open up more options.
- Understand Your Choices: There are multiple strategies available when considering a 1031 Exchange. Take the time to explore them.
- Consult with Experts: Engaging with knowledgeable professionals can provide valuable insights and guidance throughout the process.
One critical piece of advice: if you are considering a reverse Exchange, don’t close on a property you wish to use as a replacement until you have sold the original property. Owning both properties can complicate your ability to utilize the replacement property effectively.
In conclusion, the journey from inherited land to a new life in Oregon is not just about real estate transactions; it’s about reimagining one’s future. With the right guidance and strategic thinking, anyone can turn their real estate dreams into reality.
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The Guys With All The Answers…
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site, we are here to help Investors get where they want to be. Call them today! 503-635-1031.
