Categories
Investment Sales

The Basics of 1031 Exchanges

As an investor in commercial real estate, you may have heard the term 1031 exchange tossed around. But what is it, and what does it mean for you?

The most important thing to remember here is that a sale under Section 1031 allows for capital gains to be deferred, meaning taxes are still owed but not payable until later. It sounds almost too good to be true, and of course there are rules to be followed as discussed in this video.

 

If you’re considering a 1031 exchange, it’s essential to plan in advance of the sale to make sure that all deadlines can be met. With that said, though, this can be an effective way to leverage up your investment portfolio and keep growing your assets.

Categories
Leases Sales

To Buy or Not to Buy?

As your business grows, one of the most exciting (and nerve-wracking) situations is when you start to think about buying commercial real estate for your business. So how do you know whether it’s best to buy or lease?

In addition to considering where your business is in terms of age, growth stage, and cash needs, you will also want to consider your capacity for operating the property. Owning a building means that you are also solely responsible for repairs and maintenance, which may take attention away from your core business activities. You can mitigate this some, however, through your due diligence prior to making a purchase and planning for these needs.

Lastly, if you decide that you are ready to make the leap into building ownership, be sure to talk to your lender about SBA loans and other financing options that may be appropriate for your situation.

Categories
Leases Sales

Is Time Your Friend or Foe?

Time management is as much an issue in commercial real estate transactions as it is for any other part of business. If you don’t move fast enough, you may miss the boat. Conversely, if you don’t leave enough time, you may not be able to get the right fit. Here are a few tips to help manage the time aspect of your next deal.

  • Be Prepared. Sale and lease offerings may be contingent on financing or other legal requirements. Plan ahead for these contingencies and do as much homework ahead of time as possible so that the deal doesn’t have to wait while these tasks are handled. These holdups may even allow the other party to take another option, putting you back at the beginning of your search process.
  • Account for Other Parties. A commercial real estate transaction involves several parties – brokers, attorneys, lenders, title companies, construction contractors – each with a different role and timing considerations. Not having enough time to coordinate these players puts you at a disadvantage – you may not be able to stay longer at your current space, or there may not be time to find alternatives if the planned deal isn’t completed.
  • Don’t Be Shy. If you have questions about the progress of the transaction or how changes might impact the deal, be sure to ask. No news may not in fact be good news. Open communication will help identify potential problems and expedite resolution.