Benefits of Tenant in Common 1031 Exchanges

There are variations to the 1031 Exchange available such as the Tenant In Common 1031. The Tenant in Common 1031 allows the investor to defer their capital gain taxes as well as upgrade their investment property. The upgrade could incorporate additional properties. In addition, you will only have a certain amount of interest invested into the property. The Tenant In Common allows an investor to invest into a property that is already managed as a means to fulfill the 1031 Exchange requirement of similar type property to exchange. This type of arrangement has several benefits attached to it.

Management

If an investor has done property management and no longer wants to handle the day-to day management and upkeep of a property, the tenant in common 1031 exchange is the ideal arrangement. Other investors may already be managing the building or have a professional management group handling the day-to-day operations of the property. By investing into a property that already has property management attached to it, then the investor is no longer responsible for the management and upkeep of the property.

Financing

With a Tenant In Common exchange, financing may already be in place through other investors investing into the property. If it is not, then other investors investing in the property may be able to refer you to a lender they are using or one that is familiar with the process. In this type of circumstance, terms of the loans are built in, which makes it easier for you to obtain the financing needed. With financing already available, it makes the closing process simpler and quicker.

Property Identification

Tenant In Common exchange makes property identification easier. When you exercise this option, you are opening an avenue to find a property that will meet the specifications you are looking for. The company will provide you with all properties available. This reduces the time you have to take to find a property of likeness to the one you trying to exchange. It allows you to use your 45-day identification period to close on the identified property.

Diversify

Since you would only have a partial interest into the acquired property using the Tenant In Common exchange option, it would allow you to expand your real estate portfolio. The diversification comes through the ability to invest in different real estate projects that are not necessarily residential. You have can invest into office buildings, retirement homes or medical buildings. As part of a Tenant In Common, you have access to commercial property. You are able to have access to commercial property with a minimum purchase requirement.

The property access allows you to expand your property holdings. The greatest reward of being able to diversity and have access to commercial properties is that it allows you to increase your income potential. These benefits allow you to tap into an industry that you may not have been able to without meeting extensive requirements. Your income growth comes from being able to attract different clientele with greater wealth.

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