18A — March 11 - 24, 2016 — 1031 Exchange — M id A tlantic
Real Estate Journal
www.marejournal.com
1031 E xchange
By Ed Fernandez, 1031 Crowdfunding, LLC How Crowdfunding is changing the 1031 space
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bill. It is no wonder that many who wish to sell their property refuse to accept decent offers
developments are re-shaping the 1031 exchange landscape. The first is Title II of the JOBS
the way 1031 exchangers find replacement property. The second major develop- ment is the Delaware Statu- tory Trust (DST). This trust structure allows investors to purchase a beneficial interest in a larger, institutional-grade property. These assets can be difficult for average real estate investors to purchase on their own but are generally a more stable investment. In the aftermath of the Great Recession, DSTs supplanted the Tenant-in-Common (TIC) structure as a more disciplined investment vehicle. Investors and real estate sponsors were
eager to find an alternative which fixed the draw backs as- sociated with TICs. To satisfy exchange requirements and investor protection concerns, DSTs have a strict list of “7 Deadly Sins” by which every DST sponsor must adhere. These strict rules also have a myriad of other benefits: the security of professional management, no requirement to be signatory on the debt or sign on any carve-outs, limit- ing personal liability, and rent proceeds that are distributed, hassle free, as 1099 income. Additionally as a 1031 ex- changer, a DST can act as a type of exchange insurance (given the offering hasn’t sold out). A DST investment can close quickly, typically 2-3 business days, and can easily fit into any property ID strat- egy. Saying that the 45-Day ID Period can be hectic is a serious understatement; we often see exchangers who come to us with only days left in their 45- day ID Period after all of their previously identified proper- ties have fallen through. These exchangers are the lucky ones because it’s not too late to save their exchange by identifying a DST. Those exchangers who did not include a DST in their property ID line-up, often find themselves with no options but to pay taxes if any troubles crop up during due-diligence or if the property falls out of escrow for any number of reasons. With such major develop- ments improving the 1031 space, this is an exciting time to be an innovator. Seeing an opportunity to improve a frustrating process, our expe- rienced team at 1031 Crowd- funding has created a turn-key alternative solution to the traditional 1031 exchange. Through our friendly repre- sentatives and proprietary crowdfunding platform, we make it possible for exchangers to browse DSTs at their con- venience, process paperwork electronically, and acquire replacement property that suc- cessfully and effortlessly com- pletes their 1031 exchange. Ed Fernandez is founder/ CEO of 1031 Crowdfund- ing, LLC based in Orange County, CA. You can contact Fernandez by email atEdfe rnandez@1031crowdfunding .com or toll free at (844) 533- 1031. n
tick around the Com- mercial Real Estate in- dustry long enough, and
you will have the pleasure o f d e a l i ng with a 1031 e x c h a n g e . Tight dead- lines, confus- ing identifi- cation rules, and all too
“ Seeing an opportunity to improve a frustrating process, our experienced team at 1031 Crowdfunding has created a turn- key alternative solution to the traditional 1031 exchange.”
simply because they do not yet have a viable replacement lined up. While this response is both understandable and prudent, it can be particularly frustrating to buyers and real estate agents alike. The good news is there are viable options. Two major
Act which came into effect in September 2013. Until then, companies were not allowed to advertise or sell securities over the internet to persons without having a pre-existing relation- ship. This is drastically chang- ing the way private companies raise capital, and it is changing
Ed Fernandez
typical closing troubles leave many with a general feeling of dread regarding the whole pro- cess. One false step, and the IRS is ready to pounce with a potentially devastating tax
A TRUSTED INTERMEDIARY FOR 1031 LIKE-KIND EXCHANGES
Curchin 1031 Exchange, LLC is a qualified intermediary for 1031 Like-Kind Exchanges. With over twenty years of experience and hundreds of successfully managed transactions, you can depend upon our expertise to fully comply with the complex IRS Code Section 1031. • Properties can be located nationwide • Funds are held in an interest-bearing account • Transaction funds are fully insured Our parent company, The Curchin Group, LLC, is a certified public accounting firm with a 60 year history of providing expert tax knowledge and superior service. Get in touch today to learn more!
Peter Pfister, CPA ppfister@curchin.com 732-747-0500
Lynn Conover, CPA lconover@curchin.com 732-747-0500
Curchin 1031 Exchange, LLC 200 Schulz Drive, Suite 400 Red Bank, NJ 07701
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