What is a 1031 exchange and how does it work?
1031 exchange is not a tax avoidance, but rather a tax deferment. For example, if you have a property that you sell for $200,000 rather than paying the 20% tax rate, if that’s your tax rate you have to pay the $400,000. If you have a like property in mind, you can roll all $2,000,000 into other property and you’ll be able to keep your funds working for you. It gives you some extra leverage on the property.
The 1031 exchange is an internal revenue code that allows an investor to sell a property and to buy another property and the capital gains could be reinvested in that and don’t have to be taxed. There are a couple of rules that you have to follow. Firstly, it has to be the same tax payer that sells a property has to be buying the property. Secondly, there is a 45 day identification period. Thirdly, 180 days is the time frame for buying the other property, and fourthly, you have to have what is called the trade-up definition, and the next asset has to be the same price or greater.
Why should I check the zoning on a property before purchasing a property or signing a lease?
You should check the zoning on a property before signing a lease or before buying a building to make sure that your use is permissible in that zoning. In order to check the zoning you can contact either the city or county building department or zoning department and they should be able to give you the answer.
When or is there a opportune time to do exterior and/or interior improvements to the common areas of my property?
It’s advantageous for a Property Owner to do such improvements when they’re trying to increase their rent roll and their tenant class. Improvements to the common areas such as updating the lighting create a more vibrant feel, improving the lavatories can accomplish those tasks. It is also important when a property owner is planning on Selling their property to maximize the value and curb appeal to the potential Buyer.
What type of inspections should be completed during a due diligence period when buying a commercial property?
During the due diligence and inspection period, I would highly recommend performing a property condition report, environmental assessment, physical inspections, investigating the zoning and allowable uses of the property, land and improvement surveys, analyze lease documents and perhaps various physical inspections such as roof, mechanical, electrical and plumbing inspections.
I recommend that a Property Owner due a pre-due diligence property inspection with a licensed inspector. In this way, we can either correct these issues or disclose them to the potential Buyer so they cannot come back and ask for discounted price due to these issues.
What is a due diligence period in a commercial real estate contract?
Due diligence period usually refers to the time after signing a contract that the buyer has to inspect the property and make a decision whether they want to buy the property or lease the property or otherwise go forward with the transaction. It’s important during due diligence period that you gather all of your information. You have to get your inspections done, you have to get your environmental inspections done, you have to gather all the documents that relate to the property, you have to do your zoning checks and you generally have to be one hundred percent certain that you are going to go forward with this deal.
If you don’t gather all that information, when due diligence expires, your deposit money becomes non-refundable. Before due diligence expires, you can still walk away. It’s what’s also called a Free Look Period. It’s important to have a good broker and a good team of professionals around you to conduct all of these inspections, gather all of the documents, tell you what everything means and advise you whether you should go forward or not. A good broker will quarterback all of these players and make sure that everything is done timely and keep you on track.
What is an environmental site assessment?
Environment site assessment is a report that’s for real estate holdings that identified an existing or potential contamination liabilities. This analysis is also called an ESA and it addresses the underlying condition of the land and the improvements of the property. There’s also many different phases that can be done.
What is a Phase I Environmental survey?
A phase 1 is an environmental site assessment that identifies potential or existing environmental contamination liabilities.
What is a Phase II Environmental survey?
A Phase 2 environmental site assessment is performed when the Phase 1 identifies recognized environmental conditions and/or recommends further investigation. This could include some or all of the following: Mold Test, Asbestos test, Ground water testing
What does “as-is” “where-is” mean?
“As is where is” is the same as “as is.” What you see and what you don’t see is what you get. In other words, you’re getting the property or space as it is today the day you sign the deal. In this day and age you can be an informed consumer and research the property or space yourself. You can also hire the proper professionals to help you with your investigation of the space or the property you’re interested in. This way with all your research in hand you can make an informed decision, and as is doesn’t have to be so scary.
What is an estoppel certificate and why is this necessary in the purchase of commercial real estate property?
An estoppel certificate is used in a real estate transaction. It’s a signed document establishing certain facts and confirming the terms of the lease which the signing party may not later dispute or recant.
What commercial property listing services will my property appear if I list with RJ Realty?
Unlike residential real estate, commercial real estate uses many different listing services. We use up to about 14 different listing services. The two primary services that we use are CoStar and LoopNet. We also use Xceligent property search and a host of others. This is to maximize the exposure your properties will receive on the internet, and also help us to do research to understand the best place to market your property. We will also do direct e-blast to past costumers, brokers, and use paid blast services as well.
We can you provide an estimate of what my commercial building is worth today?
RJ Realty is able to provide an estimate of the value of your property. It’s because we’re in the market every day, we’re negotiating with landlords for buyers and the sellers of properties, and we know what the market value of a property is. We also use an analytical approach, we look at comparable sales of properties nearby, going back one to two years, we also look at the income and expense of the property to determine the return on investment, and finally we’ll look at the cost approach of the property to determine what it would cost to rebuild a building on that property if needed. We take all that together with our knowledge in the market, being in the trenches every day, combine all that, and we give you an estimate of the value of your property in today’s market.