This reading, as you see from the subject, is for you as a real estate investor as well as brokers, agents and real estate professionals who desire to create long term cash flow and income out of your present or soon acquired equity in residential real estate property you own. As you will see, in a changing world and a fluxing real estate market on a national level with the decreasing value of single home residential homes, there are alternate ways and ever tried and true methods of increasing your income as you diversify in you techniques and marketability.



Let's delay no further, and allow us to explain to you the benefits of the 1031 exchange and Triple Net Commercial Properties. If you are a pre-qualified real estate investor, for instance, and your aim is to set up favorable ways to organize you estate, in turn benefit your family, and generate a positive cash flow along with no property management responsibilities, along with eliminating paying capital gain taxes. Read along and make note of the information you will be learning, or refreshing yourself in memory.

A solution many real estate investors and owners have found to beneficial to their future planning and next generation inheritance beneficiaries is the 1031 exchange. Capital gains taxes are deferred on your sale of your property. You may also re-invest your equity from the sale of your investment property and place the equity as a re-investment into the TIC investment property, which is passive. If you own a TIC, you have less interest than a commercial grade property. You'll have no daily hassle of trash, turnover, tenants or toilets, and therefore enjoy the benefits thereof. One thing to keep in mind, naturally, is that you will still face fluctuations in the real estate market, an inherent risk as well as expenses associated with speculative investment strategies.

If you wish to allow for more alternatives for your heirs, this can simplify your estate for yourself and them. One heir can keep a fractional interest while another heir can liquidate their fractional share of your estate.

1031 exchange is not an avoidance of tax, but actually a rollover of equity of like properties. In the IRC Section 1031 the exchange of business use or investment property of any kind for any other business use or investment property the recognition is that there is no gain or loss. When you meet the 1031 tax exchange criteria in the 1031 tax exchange, you have a deferred tax projected until sometime in the future tense, most times until the time of the selling of your newly acquired property. This deferral can continue for you through any number of exchanges up to the point when tax liability passes into your estate, as this is an individually held investment.

There are some time restraints for the exchange. As it is called, the Acquisition Period, 180 days is the maximum number of days allowed from the closing of relinquished property or until the due date of that current years tax return, whichever of the two comes first, in order to acquire your replacement property. You, the exchanger, must first identify the property within the first 45 days. This is the Identification Period, identifying the replacement property.

Your replacement must comply with at least one of the following.

1. You as the owner may identify, regardless of their property value, up to three properties. This is The Three Property Rule.

2. You may also choose the 200% of Fair Market Rule which allows you the exchanger to identify more than three potential replacement properties. These must have a total fair market value not exceeding 200% of the final sales price of the relinquished property.

The requirements to fully defer are: You must reinvest 100% of proceeds. You as the investor must acquire newly acquired property of same or greater debt. During the time between your old property's sale and purchase of your new property, you cannot touch the money.

In triple Net Lease your tenants are required to pay all insurance, maintenance and taxes. Also included as the responsibilities of the tenant are all regular expenses of ownership, which leaves day to day management to the tenant, not the owner.

15-30 years are the norm for most commercial property Triple Net Leases. Rental payment continues throughout the term of lease. Credit rating of tenant is very important.

Now on the Triple Net Lease you have many advantages on you 1031 investment property. You as the owner are relieved from the daily management issues. Corporate tenants pay potential steady income. Mortgage loans at favorable rates are possible for you with long term leases to corporate tenants having credit ratings. Appreciated residual values because of middle income areas with desirable traffic patterns, are another advantage.

Many companies desire to lease their business property from owners such as you. This allows them freedom to occupying companies to customize their environment without committing to ownership.

1031 exchange investors, such as yourself potentially, have since the 1990's reinvested equity into triple net lease investment properties structured as Tenancy-in-Common (TIC). There are advantages to this such as the wide selection of qualified exchange 1031 triple net properties, diversification, real estate companies typically locate these properties, you can potentially invest in institutional grade properties as the exchanger, you may benefit from non-recource debt, and the range of opportunities on these investments can range from as little as 50 thousand on up to several million dollars for you as an investor.

So you see, as a prudent real estate investor, there is much to consider in the way of trading your current Residential real estate that has equity into some commercial real estate providing stable long-term cash flow. The Triple Net Commercial Property gives you the provision of long term professional tenants. You can pass on all operating costs to your tenants. Owners don't have the daily hassle and headache of management. Also remember your taxes on realized gains can be deferred when you move equity from Residential into Triple Net Commercial Properties.