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How to Buy a NNN Property for Your 1031 Exchange

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Commercial Real Estate Agent

How to Buy a NNN Property For Your 1031 Exchange

Hi, my name is Alex Casablanca, Managing Broker at Casablanca Triple Net Advisors. Today I am going to talk to you about How to Buy a NNN Property for your 1031 Exchange. Finding a replacement property for your 1031 Exchange and being able to complete a successful closing can be stressful for most investors. Meeting all the requirements and deadlines that the IRS imposes definitely adds complexity to the process.  However, it is very important that you team up with the right team of professionals who can help you navigate the complexities of the process and make the process less stressful and more efficient. 

But now the question is: How to Buy a NNN Property for Your 1031 Exchange. Here are 5 simple steps. 

1- Start Early

Starting early is one of the most important factors for a successful 1031 Exchange. And the way to start is by hiring a key group of professionals that will assist you toward a successful closing. Those key professionals are:

  • Hire a Competent and Experienced NNN Buyer Broker. It is very important that you team up early in the process with a competent and experienced NNN Buyer’s Broker that can represent your interests exclusively. The Seller’s Broker represents the best interest of the Seller, not your interests as a Buyer. As your Buyer’s Broker we will assist you with market research, property evaluation and selection, offer submissions and negotiations, due diligence, and closing. We work quickly and decisively towards finding for your consideration as many properties as possible within your criteria. We have the knowledge, expertise, and connections with Sellers and Brokers’ colleagues to negotiate the best price and terms for you. 
  • Hire a competent and experienced Real Estate Attorney with previous experience with NNN transactions. Once we get your offer accepted, your attorney should be ready to review the purchase agreement, the lease and the due diligence documents.  
  • Select your 1031 Exchange intermediary company. Your 1031 Exchange Intermediary will be the custodian and administrator of your 1031 Exchange, so it is important that you select them early in the process. This company will be the receivership of the funds from the sale of the property that you are selling. 
  • Select your Accountant or Tax Attorney. You must also team up with a knowledgeable Accountant or Tax Attorney with experience in 1031 Exchange Transaction. Preferably should be the one that will end up filing your taxes the next year which will include the reporting of your 1031 Exchange. He or She will assist you in making sure that you comply with all tax rules and IRS requisites for a qualified 1031 Exchange.

2- Determine Your Acquisition Criteria

Your acquisition criteria will be a determinant in the success of your transaction. Your investment criteria is comprised of several important key elements, such as your Price Range, Cap Rate Expectations, Risk Tolerance, Target Locations, Tenants of Interest, Years Remaining on the Lease, and Lease Guarantor, among others. It's important to have a mind that the higher the cap rate, the higher the risk.

3- Start Looking for Properties

Start looking for properties that are in line with your investment criteria with the goal of starting to submit offers for the property or properties that most closely match your criteria. Most investors prefer tax free states such as Florida and Texas because their rental income will not be subject to state income taxes. Fast Foods, Pharmacies are also among investor's preferred Tenants. As your Buyer’s Broker we will do that job for you. We will assist you with market research, property evaluation and selection, offer submissions and negotiations, due diligence, and closing. We work quickly and decisively towards finding for your consideration as many properties as possible within your criteria. 

4- Have your #1 Property selection under contract before your 45-day identification period expires.

This is one of the absolute most important. The only way to secure a property is by putting it under contract. Some investors focus on submitting as many offers as they can, but by submitting offers or even having them accepted you don’t secure a property. As your Broker, we work with the goal of helping you to have your #1 property selection under contract before your 45-day identification period expires.

5-Close on your first property selection

Close on your first property selection at least 60 days after you closed on your downleg property, or 15 days after the 45-day identification period expires.

In Summary, the 5 steps on How to Buy a NNN Property for Your 1031 Exchange are:

  1. Start Early by assembling an experienced group of professionals, which includes: Hire a Competent and Experienced NNN Buyer’s Broker. Hire a competent an Experienced Real Estate Attorney with experience in NNN transactions. Select Your 1031 Exchange Intermediary Company and Select your Accountant or Tax Attorney
  1. Determine your acquisition criteria, which is comprised of Price Target, Cap Rate Expectations, Risk Tolerance, Target Locations, Tenants of Interest, among others. 
  2. Start looking for properties that are in line with your acquisition criteria, and start submitting offers on the ones that most closely match your criteria.
  3. Have your #1 Property Selection Under Contract on or before your 45 days ID period expires
  4. Close on your first property selection at least 60 days after you close on your property.

Although a 1031 Exchange process could be seen as stressful and overwhelming, the key is to start early and hire the key competent professionals to assist you. If you do that, the process can really become really straightforward and stress-free.

At Casablanca, we specialize in representing NNN Buyers and 1031 Exchange Investors Nationwide USA. We have the knowledge and expertise to guide you along the way from market research, identifying potential properties, submitting offers and negotiating them, due diligence, up to the closing table. We have helped many NNN Buyers and 1031 Exchange Investors in finding and negotiating the best property according to their investment goals and risk tolerance.

Moreover, we represent our Buyer’s for Free since we get paid from the Seller, so you get our expert advice and representation at no additional cost to you. We also Pay for our Buyer’s Closing costs up to a maximum of $10k. This incentive will offset or cover completely the major Buyer’s closing costs expenses such as Title Insurance, Attorney Fees, Recording Fees, among others. We are the Brokers that give you more in exchange for your trust. 

If you have any questions feel free to contact me directly at 407-205-7570 or you can also email me at Alex@CasablancaCRE.com. Feel free to call me anytime at your convenience, I’m always available for my clients. Thank you very much for watching this video and I’m looking forward to speaking with you.