While having a couple of investment properties in hand excites every investor, managing those properties is a nightmare for them. If you’re a real estate investor and owns a couple of investment properties, you must have realized how challenging it is to maintain all your properties. From keeping an eye on the bill due dates to looking after the repairs, everything comes under the landlord’s responsibilities. You might have heard investors selling out their properties even at a lesser value sometimes. This mostly happens because they don’t want to continue managing their property. So, they choose to sell it. However, there is a better option than just selling your property and paying capital gain taxes to get rid of property management.
Do a 1031 Exchange on Your Investment Property that You Don’t Want to Manage
Before I let you know how you can get rid of property management, first focus on how you can save capital gain taxes if you sell your property. Generally, upon selling a property, you need to pay capital gain taxes imposed by the State and Federal Government. The taxes could be huge if the property value is enormous. Selling your investment property under a 1031 exchange agreement can help you defer capital gain taxes. If you’ve no idea what does a 1031 exchange means, it is a tax-deferral opportunity provided by the IRS to investors on exchanging an investment property for another like-kind property. This means you must reinvest your sale proceeds into another investment property to qualify for a 1031 exchange.
NNN Properties are the Ideal Options
Now, reinvest the proceeds into a NNN property to get rid of the burden of property management. A NNN or Triple-Net lease is a single-tenant arrangement that asks the tenant to pay all major operating expenses associated with the subject property. Therefore, all major expenses, like insurance fees, property taxes, and maintenance costs (if any) are paid by the tenant, and you, as a landlord, will not require to pay these expenses from your income. Plus, you don’t need to answer those late-night calls reminding you of property bills. If you have a couple of investment properties or any non-performing asset that you want to let go, doing a 1031 exchange on it for a NNN property is a wise decision.
Where Can You Find NNN Properties For Sale?
There are a few good 1031 exchange companies that have a NNN properties list posted on their websites. All you need to do is visit one such website and choose an ideal NNN property. However, before you make the final call, I recommend you speak to your 1031 advisor or a 1031 exchange expert. Discussing your present situation and requirements with an expert can help in getting better returns. I hope you found this blog valuable and got the answer you were searching for.