Private Investment And Exchange Strategies From The Experts


The Safe Act

The safe act should be a non-event. There are exceptions, allowing entities to finance several transactions. Trusts are entities. Could there be several trusts? Could the lender be another trust, not the seller's trust? Following the basic rules of amortized, fixed-rate, minimum five year rate, etc. rules would be prudent.


Investors are exchanging options, contrary to popular opinion. An option held for more than 12 months can be exchanged for other options or real estate. Options can be used to lend money. The lender holds the beneficial interest of the trust and the borrower has the option to pay the loan plus interest and receive the BI.

Options are used by 1031 exchangers to adjust the schedule of the sale or the purchase. They net lease either property until a sale is completed. Options can protect property from attachment. They can be used on notes, cars, mobile homes, leases and every other interest in real or personal property.


Owners are placing property in trusts prior to a foreclosure. Most lenders are not pursuing borrowers for deficiency judgments. They must get personal service before a deficiency can be obtained.

Personal property trusts are being used for vehicles, mobile homes, financial assets, notes, mortgages, and deeds-of-trust, etc. There is no public record of these documents and there is no requirement for an address of the trustee. These are being used for the same reasons land trusts are used, with most of the same benefits. Trust interests can be sold, financed, shared and exchanged much easier than deeded interests.

Investors are finding gifted shares of trust properties in their files. At $13,000 per child this year, per owner, significant portions of properties have been passed to heirs in the past two or three years.

1031 Tax Free Exchanges

Investors are being aggressive in many exchange areas. They include: Reverse exchanges. These can remain open for one year compared to the 180 day limit for forward exchanges.

A few exchangers know that they do not have to identify replacement properties to their intermediary. They can use a principal in another property.

They have discovered a way to avoid tax on mortgage over basis by buying replacement properties with the debt needed. For example, a remote piece of land for a small down payment and a large seller financed note. They know that there is no minimum holding period required on replacement property before another sale or exchange.

This can put an investors program on a fast track as long as the investment intent is established.

In a sale of multiple properties, the holding period for the group is the oldest property in the group. Some exchangers use properties that have been gifted to them, where they receive the holding period of the donor. Some traders give sellers of their replacement properties the option to convert seller financing to equity interests. At a later date, the traders may exchange into that property and buy the seller's share.

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