The National Commercial Real Estate Investment Property market is still strong, strong enough to still maximize the equity that exists in your client’s long-held assets.
Yes, the interest rates have risen and while pricing has begun to soften (including the Single Tenant Net Lease (STNL) market) and deal velocity has started showing signs of slowing, the overall impact to the market as a whole has been very little.
For those investors/property owners that are indeed looking to utilize the equity that is accumulated over the last couple of decades to fund their golden years, still have time. Time is still on their side to dispose of those assets and complete a successful 1031 Exchange into a long term, passive asset that will provide them strong returns for some time. Yes! Time is on their side! Look, we can all agree that a recession is near or maybe already here and that a market downturn will soon follow, the good news is it is not going to happen overnight. However, once it starts no one knows how long it will last or how deep it will go.
The STNL market has not slowed much at all. Pricing has started to correct as finding five cap and above deals has become easier, but the inventory continues to be quite plentiful. The National multifamily market continues to be healthy and strong especially for the smaller unit assets.
The important thing to remember, especially in a market landscape such as this, is to map out your exchange prior to putting the property you plan to relinquish on the market. This is probably the most common reason why more than 60% of exchanges fail every year.
Every year, I personally see and hear of many failed exchanges due to poor planning or lack of proper representation. The most recent was a local residential agent here in Southern California that sold one of their single-family rentals (SFR) and decided to leverage up into another single-family rental. Well, they identified three properties that matched their criteria but because of the velocity of the Southern California residential market they were priced out of all three deals. A mistake that cost more than $250,000 in capital gains tax. Using a different identification rule or adding a DST as a third option would have kept this from happening. This example highlights the importance of having planned for your exchange as well as having proper representation by an agent that completes multiple exchanges each and every year.
If you are an investment property owner who is interested in a no obligation, private consultation, please visit www.Best1031Online.com, or contact James Bean of SVN-Rich Investment Real Estate Partners, CA DRE# 01970580, at 805-779-1031 or email at firstname.lastname@example.org.
If you are an agent/broker, I am happy to discuss strategies with you on how to best serve your next listing client in preparing them for a successful exchange. Please visit the site and click on the Agent’s button located at the top right-hand corner of the Home Page!
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All information is deemed to be accurate, and not advice. All investors/taxpayers should consult their CPA, tax attorney and investment advisors.