00:00In this video, I'm going to break down the proper way to do a 1031 exchange
00:04with peace of mind and clarity and not leaving any money on the table.
00:10One of the most common concerns I hear from owners who are looking to sell is,
00:14I want to sell, but I don't know what to buy or find me my exchange property first.
00:18The problem with this strategy is the owner of that exchange property
00:22isn't going to wait for you to sell your building so you can buy theirs.
00:25If you found that exchange property and you're not ready to execute,
00:28you're going to risk leaving money on the table by doing a fire sale.
00:31But first, let's identify the exchange process and a couple key terms we're going to be discussing.
00:36The law is once you sell your property, you have 45 days to identify up to three properties for your
00:43exchange and 180 days to close. Your down leg is the property that you're selling while your up leg
00:49is the property you're buying or your exchange property. The first step is to list your down
00:54leg on the market to create maximum exposure. The goal here is to obtain the highest possible price
01:00with the best possible terms. You want to lock in your down leg so that you can start making offers
01:06on your up leg while you're still in escrow before the clock starts ticking. The next step is you're
01:11going to want to add extensions to create flexibility. The standard escrow timeline is 60 days. You're going to
01:16want to add two separate 30 day extensions. This gives you 120 days to find your up leg while you're
01:23in escrow on your down leg. And if you don't find anything in that time, you still have six months
01:28afterwards. The next step is that you want to have the buyer release their deposit. It's important that
01:33you're in control of buyer's deposit because it increases the probability of the close. But also,
01:38and more importantly, now that you're in possession of these funds, you can start using buyer's deposit to
01:43make offers on your exchange. Now you're ready to execute. You have the leverage and you have the
01:48credibility. Your down leg is secured, buyer's deposit is released, and you have extensions.
01:53You're now a qualified buyer. Sellers are going to take you very seriously because you stand out,
01:58more importantly, you're ready and capable to perform.
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