A slower Dallas real estate market is creating more of a demand for reverse 1031 exchanges. Properties are taking longer to sell making it difficult for sellers to adhere to 1031 exchange 180 day rules. But there is another option called a Reverse 1031 Exchange allowing for the roll-over of proceeds after closing on another property. Inman had a great article by Ilyce Glink addressing reverse exchanges. Read what she has to say:

Q: We are Canadian citizens who have owned a home in Fort Myers, Fla., for four years. There is no mortgage on the property.

We have put the property up for sale, and have made a down payment on a new house. We have bought and sold in the past, and I understand that as long as the new house is equal or higher in value, there are no capital gains taxes owed on the profits under IRS tax code 1031.

What happens if we have to close on the new house and the existing one has not sold yet? When it does sell, will we be able to use the proceeds of the sale to pay off the new mortgage with no penalty?

A: A 1031 tax-free exchange is used when a real estate investor sells a piece of property and purchases a replacement property that costs at least that much or more. The exchange must happen within a specified period of time. You have 45 days to identify the property and 180 days in which to close.

Many real estate investors are finding that the slow real estate market makes it tough to adhere to the deadlines. What can you do? You can set up a reverse exchange, in which you purchase the new property first and then sell the existing property afterward.

A qualified 1031 exchange company should be able to handle a reverse exchange. But be prepared, as reverse exchanges cost significantly more than a regular 1031 exchange. You should also hire a real estate attorney to make sure you’re doing it correctly and meeting all of the necessary deadlines.

A 1031 tax-free exchange cannot be used on personal property, so be sure that you are not using the property more than the time allotted by the Internal Revenue Service (IRS). Your 1031 exchange company should be able to advise you.

Are you selling Dallas real estate qualifying for a 1031 exchange? Visit TexasHomeCentral.com or give me a call for more information.

What’s your Dallas real estate worth?

Reverse 1031 Exchanges Rise In Dallas Real Estate

A slower Dallas real estate market is creating more of a demand for reverse 1031 exchanges. Properties are taking longer to sell making it difficult for sellers to adhere to 1031 exchange 180 day rules. But there is another option called a Reverse 1031 Exchange allowing for the roll-over of proceeds after closing on another property. Inman had a great article by Ilyce Glink addressing reverse exchanges. Read what she has to say:

Q: We are Canadian citizens who have owned a home in Fort Myers, Fla., for four years. There is no mortgage on the property.

We have put the property up for sale, and have made a down payment on a new house. We have bought and sold in the past, and I understand that as long as the new house is equal or higher in value, there are no capital gains taxes owed on the profits under IRS tax code 1031.

What happens if we have to close on the new house and the existing one has not sold yet? When it does sell, will we be able to use the proceeds of the sale to pay off the new mortgage with no penalty?

A: A 1031 tax-free exchange is used when a real estate investor sells a piece of property and purchases a replacement property that costs at least that much or more. The exchange must happen within a specified period of time. You have 45 days to identify the property and 180 days in which to close.

Many real estate investors are finding that the slow real estate market makes it tough to adhere to the deadlines. What can you do? You can set up a reverse exchange, in which you purchase the new property first and then sell the existing property afterward.

A qualified 1031 exchange company should be able to handle a reverse exchange. But be prepared, as reverse exchanges cost significantly more than a regular 1031 exchange. You should also hire a real estate attorney to make sure you’re doing it correctly and meeting all of the necessary deadlines.

A 1031 tax-free exchange cannot be used on personal property, so be sure that you are not using the property more than the time allotted by the Internal Revenue Service (IRS). Your 1031 exchange company should be able to advise you.

Are you selling Dallas real estate qualifying for a 1031 exchange? Visit TexasHomeCentral.com or give me a call for more information.

Investing in Dallas real estate and owning rental property sounds glamorous, but it isn’t for everyone. 

Be sure you know what you’re getting into and understand what you are getting into before signing on the dotted line. Here are some questions you should ask yourself before purchasing an investment property:

• Where will the down payment come from for this property?
• Do you have cash reserves so you handle periods of vacancy, i.e. no income?
• How about reserves for unexpected repairs and other expenses?
• Do you need property to rent immediately or do you have time and money for a “fixer-upper”?
• Will you make needed renovations and repairs or hire someone else for the job?
• What type of property do you want: single family, apartment, duplex, condominium, or vacation property?

Thinking it through ahead of time assures that you won’t get caught making a rash decision you will regret later.

If you decide now is the time to take advantage of lower market prices and invest in Dallas real estate and rental property, visit TexasHomeCentral.com.

Search all Dallas real estate and homes for sale.

As an important follow up to my last post, I wanted to point out how strong the Dallas real estate market really is. My last post, “Dallas Home Prices Fall 4 Percent” covered the recent news from a broad view. The fact is, the Dallas Fort Worth Metroplex is made up of a lot of smaller cities like Frisco, Plano, Keller and Grapevine to name just a few. Not every city saw a decrease in home prices, in fact many saw a healthy increase in home prices.

Forbes Magazine recently examined the country’s 50 largest metro areas to identify the “economically healthiest cities” and Dallas-Forth Worth, San Antonio, Austin and Houston ALL made the top 10 list. These top 10 cities are areas that Forbes considers practically “recession-proof”. The magazine studied unemployment, job-growth, home price data and metropolitan product growth. (Source: Forbes, Matt Woolsey 04/29/2008)

So while there is a slight dip in home prices, the economy is still strong and what better time to buy a new home than now? If you were a stock market pro and a home was a stock, then this would be a no-brainer. You’re buying a stock from a company that is strong and is facing continued growth. The stock price is low so now is the time to strike… okay, so that was cheesy but I think my point is clear.
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According to CNNMoney, more people moved to the Dallas Fort Worth metroplex than to any other metropolitan area in the United States last year. The population here increased by 162,250 between July 1, 2006, and July 1, 2007, according to a new U.S. Census Bureau report. Atlanta, Phoenix and Houston also saw their ranks swell by more than 100,000 people each.

Eight out of the top ten fastest growing metro areas were located in the South, and the South also accounted for more than half of the 50 fastest growing regions.

The Sunbelt is the fastest growing part of the country because in large part thanks to its lower cost of living – from housing and groceries to taxes. The region has been one of the fastest-growing for years now, and in the words of William Frey, a leading demographer, “growth breeds more growth.” As more people move to an area, there is increasing demand for goods and services, which creates more jobs. More jobs means more homebuyers. More homebuyers moving into an already increasing housing market means the potential for a stimulated Dallas real estate economy. Here in Flower Mound we are fortunate that the drops in value that are happening on both coasts are not happening here. That is not to say our market is not slowed slightly but a boost to even a flat market could mean a banner year for real estate and mortgages in the Dallas Fort Worth area!

Craig Pollard is a mortgage professional and owner of Texas Mortgage Team. He specializes in the Dallas Fort Worth area and is a frequent voice on Texas Home Central’s blog. Craig can be reached at 972-317-9900 or emailed by clicking here.

Aside from interest and rental rates, perhaps the next question you need to ask yourself as a home investor in Dallas Fort Worth is, “what are the ideal mortgage terms” or “how many years you want your mortgage to be”? The answer to that really depends on your goals as an investor as well as your financial situation.

With the market today, your only real choices on an investment property are fixed rate loans with 15, 20 or 30 year terms (you COULD technically do an ARM, but the rates are about the same as a fixed rate loan). What you have to ask yourself is, am I in this for the short term (do I just want to cash flow the property monthly and flip it in a few years) or am I going to keep this property for the rest of my natural life (and pay it off and keep it). The answer to those questions, along with your financial position, can help you determine the best term for you.

As an investor, chances are you are going to be putting money into the property to fix it up. If you are short term, you probably need a lower payment to keep your cash free so that you can make the improvements. In this case, the 30 year term is most likely a better bet for you. This would allow you to possibly be in a positive cash flow position every month, have lower monthly payments, and let someone else pay all of your mortgage payment. The disadvantage to a 30 year is that you do not pay your principal balance down as fast, but you are banking on buying the house right, making solid improvements, and a good Realtor to market the house for lease and sale to make your money.
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