Managing Partner, Todd Robinson, joined Momentum's podcast this week to provide insight on multifamily deal structures. This episode focuses on the1031 Exchange, also known as the Like-Kind Exchange, which allows investors to defer paying capital gains taxes on the sale of the first property and reinvest the money into a new investment property.
A 1031 exchange allows real estate investors to grow their portfolios and reap more benefits when combined with multifamily syndications. When combined, this type of deal is often structured TIC (Tenant In Common) ownership structure. In a TIC structure, investors have an ownership interest in the entire property instead of owning a specific unit or portion. Each investor is responsible for their share of the property's expenses and income. They also have the right to sell or transfer ownership.
If a 1031 exchange is used to invest in multifamily syndication, the benefits can include diversification, professional management, access to expertise, and the potential for more significant returns. However, some potential risks to consider are market, property-specific, operator, illiquidity, and regulatory risks.
The 1031 exchange approach to multifamily syndication can be a dynamic tool. However, working with a qualified tax and investment professional who fully understands the investment and its risks is essential.
To learn more about 1031 Into Multifamily Syndications, listen to the full episode here and consider contacting Mr. Robinson and the Robinson Franzman team for expert guidance and support.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.