See the full blog post at: https://retipster.com/1031exchange
Check out RealtyMogul at: https://retipster.com/realtymogul
Not long ago, I had a conversation with the folks at RealtyMogul about a pretty brilliant way to AVOID the stressful time crunch that comes with most 1031 exchange real estate deals.
(Note: RealtyMogul is a real estate crowdfunding website that allows investors to passively invest in fractional ownership of larger, commercial properties).
With RealtyMogul, you can essentially take the sales proceeds from your property, and rather than taking on the stress of finding another investment property within 45 days, you can simply invest your funds into a property through their platform.
There are a few different scenarios where it might make sense to invest your cash into a crowdfunded project, rather than going it alone and relying on hopes and prayers for everything to come to fruition.
Scenario 1: When the Deal Falls Apart
It's not uncommon for investor has start the 180 timeframe to do a 1031 exchange, but then their deal falls apart. For one reason or another, they're unable to find a good alternative to invest their money into, and they simply need to put their cash somewhere before they run out of time.
In these situations, RealtyMogul provides a great "back door" that will allow the investor to place their money where they can still defer the taxes on their capital gains.
Scenario 2: When There's Excess Cash Leftover
In some cases, an investor may have found a new property, but the new deals only requires a portion of the total sale proceeds they received from their previous property. As such, they need somewhere else to put the remainder of their cash, in order to avoid paying taxes on the capital gains from this excess cash.
Again, RealtyMogul provides a great alternative solution, by allowing investors to inject this excess cash in increments as little as $5,000.
Scenario 3: The Reluctant Landlord
Sometimes an investor wants to keep their investment dollars in real estate, but they don't necessarily want to be a landlord or property manager (and all the headaches that can entail). For instance, if someone inherits an rental property, but doesn't want to get into the rental property business. Alternatively, if someone wants to "cash out" on the appreciation their property has earned, but they don't want to upsize to a larger property with bigger problems to manage.
With RealtyMogul, you can still be a passive real estate investor by contributing a portion of the overall proceeds and letting the professionals deal with the hands-on work. When your full-time job is NOT as a real estate investor and you're busy with other things, you may want to do less work and put the day-to-day tasks on someone else who is geared up to handle them (so you don't have to deal with tenants, leases, repairs, trash, etc.).
Surety of Closing
One of the biggest benefits of working with RealtyMogul is the surety of closing.
When an investor commits their funds to one of these projects, they don’t have to worry about the deal falling apart between the 45 and 180 day timeline, because the properties have already been acquired and the financing is in place. RealtyMogul doesn't even bring in the investors until after these milestones have been reached.
It's also a much faster process. When you commit to a project with RealtyMogul, you don't have to wait weeks for a closing, the funds typically take 3 – 5 business days to go through.
From what I know of this outfit, RealtyMogul is one of the more conservative companies in the real estate crowdfunding space, and they do a great deal of vetting on each property they get involved with. Of course, there's never any guarantee as to how your investment dollars will perform with a company like this, but if you want to work with a company that does regular site visits on every property and is intimately familiar with the numbers on every deal (and can offer a much easier path to completing a 1031 exchange), this could be a company worth your consideration.
Have you ever used a company like RealtyMogul before? What was your experience like? Let us know in the comments below!