00:00In this video, I'm going to break down the proper way to do a 1031 exchange with peace
00:04of mind and clarity and not leaving any money on the table.
00:08One of the most common concerns I hear from owners who are looking to sell is, I want
00:14to 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 isn't going to
00:23wait 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, you're going to risk
00:29leaving 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
00:43for your exchange and 180 days to close.
00:46Your down leg is the property that you're selling while your up leg is the property you're buying
00:51or your exchange property.
00:52The first step is to list your down leg on the market to create maximum exposure.
00:57The goal here is to obtain the highest possible price with the best possible terms.
01:01You want to lock in your down leg so that you can start making offers on your up leg while
01:07you're still in escrow before the clock starts ticking.
01:10The next step is you're going to want to add extensions to create flexibility.
01:13The standard escrow timeline is 60 days.
01:16You're going to want to add two separate 30 day extensions.
01:19This gives you 120 days to find your up leg while you're in escrow on your down leg.
01:25And if you don't find anything in that time, you still have six months afterwards.
01:28The next step is that you want to have the buyer release their deposit.
01:32It's important that you're in control of buyer's deposit because it increases the probability
01:36of the close.
01:37Also, and more importantly, now that you're in possession of these funds, you can start
01:41using buyer's deposit to make offers on your exchange.
01:45Now you're ready to execute.
01:46You have the leverage and you have the credibility.
01:49Your down leg is secured.
01:50Buyer's deposit is released and you have extensions.
01:53You're now a qualified buyer.
01:55Sellers 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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