Case study 15- 1031 exchange a Macon house for a Warner robins house.
If your looking for someone to buy your house in a short time, you may want to find investors that are doing a 1031 exchange.
Read this post to find out how a 1031 exchange works and why these are the buyers you want.
Before we talk about the house buyer that can save your bacon if you need to sell your house fast, let me tell a story about our latest seller this happened to.
1031 Exchange one house for another.
If you read our biography on “Our Company” page, you know we lost our first rental properties to bankruptcy in 2010. After getting an education, we jumped back in and bought our first rental house… again, in Macon Georgia. After rehabbing that house and renting it for seven (7) years, we decided to sell it and move our investment to another property closer to home.
“They would miss out on the house they were trying to get.”
The Warner Robins House we bought was being sold by a couple that had committed to another house on the other end of Warner Robins near Kathleen. They had a time crunch. We found them with the help of a realtor in our house buying network. We tried to look for people that needed help (like floating two mortgages or pre-foreclosure). Although this family had just put their house on the market, they were already in trouble. If they didn’t sell their house fast, Sound familiar?
Since we had 1031 exchange money on standby, we were able to close on their house in less than three weeks and save the purchase of their new home. We were buying their house for cash, so it didn’t take long and we saved ourselves a lot in taxes from the sale of our other property in Macon. Win-Win.
Ideally, it’s better to have your new investment property found and on standby before you sell your house, but we got it worked out. We bought the new rental house in Warner Robins using the proceeds from the old rental house in Macon as a down payment and a small loan.
So, what is this 1031 exchange you speak of?
We buy houses around Warner Robins Georgia to rent and flip. Sometimes we have to sell a property and put the proceeds into other investments. Tax code section 1031 is also called a “like-kind” exchange.
“A 1031 allows you to move those “Profits”…”
When you use a house as an investment property for more than a year, there are tax benefits that allow you to sell that rental property and move those proceeds into another investment property similar to the one you just sold. For example; trading one house for a bigger house; trading a duplex for a house; trading three condominiums for a large house or even two houses for a multi-unit building.
Because of the money we invested in the Macon Georgia house was so little (meaning low basis) and the current value of the house had climbed so much, we decided to sell the house using a 1031 exchange. We had a lot more equity in that property than our original investment.
Profits from the sale of an investment property consists of the sales price minus the initial investment when you bought the property. A 1031 allows you to move those “Profits” to another investment without getting charged taxes.
How does a 1031 exchange work?
The closing attorney (or title company in other states) sends the proceeds to an accommodator (you found ahead of time) who holds the money from the sale of the your investment. Now you have forty-five (45) days to identify a new property to buy (or properties, you can put the money in more than one) and ninety (90) days to complete the purchase of the new investment(s).
The trick to learn
If you need to sell your Warner robins (or any) House fast, find a 1031 exchange accommodator that works with investors in your area. They can’t say who their clients are, but they can let their clients know you have a house for sale. These clients have money literally burning a hole in their pocket and it needs to go somewhere or they will get charged taxes on it. Use this trick to find a buyer when your running out of time on the sale of your house… OR better yet, call us.