Advantages of 1031 investments – aside the tax aspect
The main reason why 1031 investments are so acclaimed is that they are tax-deferred. But besides this amazing one, these investments come with plenty of others that make them perfect even for beginner investors. Tax deferred solutions offer the perfect alternative to accumulate a generous wealth, without the hassle of managing a commercial property. Also, below you will find a couple of other benefits they have.
1. They offer great income opportunities
These investments offer the advantage that they increase the re-investment chances one has. For instance, one could swap a raw land for a commercial building, the commercial building for a ranch, the ranch for a rental apartment building and so on. They all are considerably more profitable than the raw land, they all have more potential than it does and they are perfect for further reinvestments. Only analyse what the market has for you for the following years, see what potential trends you could identify and invest in that type of properties.
2. Consolidate your status
Many find that being a landlord, for example, is quite tiring and complicated. They would rather be the owners of a commercial building or a building that requires lower management implication from them. The great thing about these investments is that you can opt for whatever type of property you desire, and some are easier to manage than others are. They have the opportunity to consolidate their status on the market without over stressing or overworking themselves.
3. Diverse investment opportunities
If you are the owner of a highly valuable property, you could easily swap it for multiple ones, if you want to diversify the areas and markets you are present in. This allows you to test the waters and decide what type of properties fit better your investment style and approach. Experimenting is the answer and 1031 property investments give you the possibility of doing so with minimum risks.
4. Move all your properties in a single state
Having properties in multiple states might be too stressful for many. But these investments offer the owners the possibility to swap them with similar properties, all in a single state. This comes with the advantage of an easier management process and more control over the properties, all these without any taxes involved.
Although there are only benefits that these investments bring, you should always consider to consult a tax or 1031 specialist. Although these investments are quite easy, they come with the necessity of assistance, because the investor is not allowed to get in the possession of the money at any time. Also, there must be followed a strict timeline in order to accomplish these investments with success, and in many cases, investors are not able to follow those by themselves. In order to find a specialised company, see what the market has to offer, se for how long they activate in the field, and what client portfolios they have. All these aspects weight a lot when choosing a similar agency.