When it comes to 1031 Properties, what are Your Options?

Written by admin on May 15th, 2011

We live in a world of options: 31 flavors, 500 channels, super-sized value meals, and countless other options along the way. It makes sense that you’re going to be curious about the options that are available to you when it comes to 1031 properties. In fact, it’s a good idea to learn as much as possible about the options available to you so you can make an informed decision about what is your best choice and why.

Commercial Retail Properties for 1031 Investments

Commercial real estate is an umbrella term that covers a wide range of property types. One favorite among investors are retail ventures. These properties include restaurants, clothing stores, stand-alone retail shops, shopping centers, malls, and outlets. That leaves a lot of ground to cover and can be a gift of an incredible headache to an investor depending on investment style and future plans.

Hands-on investors revel in this type of investment, while those who prefer for a property to pretty much run itself, either run screaming for the hills or invest in a management firm to help manage the properties (especially when purchasing multiple properties of this nature).

Warehouse and Office Space for the 1031 Investor

Other options for those interested in 1031 properties are purchasing warehouse space, storage space, and/or office space. These offer appeal because many investors feel they aren’t as “high maintenance” as many retail properties. That isn’t always the case. The number one priority when you own any of these types of properties is to keep them filled. If you are particularly skilled at that or have contacts in the community that are always willing to help you out, this is a wise choice. It is certainly one of the property options for 1031 investments you’ll want to consider.

Net Leased Properties for 1031 Exchanges

One not so secret weapon of real estate investors everywhere is the NNN lease property. Of course, there are net leases (N lease), double net leases (NN lease), and triple net leases (NNN lease) to choose from. Each one offers a little incentive to you, as the property owner, to lower the monthly lease in exchange for a long-term (usually well-known) tenant. The depth of the discount varies greatly from one “N” to the next. However, so do the benefits of owning these types of properties.

A net lease is a lease where the long-term tenant agrees to pay the property tax during its tenure. Double net leases pay property tax plus insurance. The triple net lease is the big granddaddy to consider. With this lease the tenant pays the property tax, insurance, and some degree (if not all) of the maintenance. The exact terms should be worked out between the two of you and spelled out completely within the contract.

As you can see you’ll find no shortage of choices when it comes to 1031 properties.

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