One of the great pleasures in this business is working with real estate estate investors and helping them dramatically increase the rate of returns they are getting on their capital. Having the tools, knowledge, and resources are all an essential part in making this happen. Real estate investing doesn't have to happen haphazardly or accidentally. Having a strategy is important. Debbie Bannister from Exchange Resource, Inc. has a world of knowledge that allows investors to keep more of their money when making moves in real estate. I am glad to have her as a resource I can refer to my investor clients.
Debbie: Thanks for having me.
Ryan Byrne: Can we start off by maybe explaining what a 1031 Exchange helps people accomplish?
Debbie: Absolutely. 1031 Exchange is a tax shelter that investors use to defer their gain. What they accomplish is they’re able to use all their money from a sale to purchase more real estate, not what’s left over after taxes.
Ryan Byrne: Right. It defers taxes and they’re not losing money unnecessarily when they move their resources or assets from a non-performing asset class into maybe a better performing real estate investment.
Ryan Byrne: Now, you shared something with me that I didn’t know. You said that it’s possible to do a Reverse Exchange. Can you explain how that works a little bit?
Debbie: Well, Reverse Exchanges are really valuable tools. They’re not for everybody, but for the right person, they’re amazing. Because what happens is, it allows the taxpayer to buy first and then at the close of the purchase, they have 180 days to sell what they have to sell.
What this eliminates is the threat the opposite direction. There’s a 45-day window to identify what they have to buy and if they can’t buy what they’ve identified in 45 days, their exchange is disqualified.
Ryan Byrne: Right.
Debbie: So, when somebody is looking for that right piece of property, this eliminates the threat of it falling apart. They can buy first and then they have that 180 days to sell.
Ryan Byrne: So, that Reverse Exchange helps you get an extra layer of protection. A lot of investors out there did miss their target windows in identifying certain properties, had to pay the capital gains tax, but could’ve avoided that if we had called Debbie and set up a scenario to help them avoid that consequence.
Debbie: Exactly. And just as a side point, there’s different things, like a hybrid, where we can combine exchanges, and this helps keep the transaction where it’s going to be successful, versus something falling apart.
Ryan Byrne: All right, thanks, Debbie. Well, you’ve heard it here from Debbie Bannister and Exchange Resources. I’m Ryan Byrne, real estate agent here in Orange County.
Debbie: Thank you.
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Ryan Byrne is a real estate agent and realtor working as a Home Selling Specialist in Orange County, CA in Huntington Beach, Fountain Valley, Costa Mesa, Newport Beach, Mission Viejo, Aliso Viejo, Cypress, Garden Grove, Irvine, Lake Forest, Santa Ana, Westminster, Rossmoor, Long Beach, Los Alamitos, Cypress and Southern California.