The commercial real estate economy can shift quickly and it can be difficult to stay on top of recent trends. In this article, we are going to discuss some trends that we see in the real estate economy as they relate to 1031 exchanges.
Property Management Fatigue
I have a lot of clients that have highly appreciated duplexes and single-family rental properties, and the owners are getting tired of managing these properties.
They don’t want to deal with tenants, trash, toilets, and collecting rent. As a result, they’re wanting to sell their properties and transition into other investments (whether it's triple-net-lease, single-tenant, or some other type) and try their hand at some other aspect of commercial real estate.
Regulation & Rent Control
We're also seeing some fear in the Minneapolis-St. Paul metro area that rent control and more regulation of landlords will make the business of renting even more difficult.
The landlords in Minneapolis and Saint Paul have dealt with increased property taxes and regulatory restrictions for quite a while and now many of them are done staying in that space. These investors are looking at this as a great opportunity to sell at the top of the market and reposition into other segments that are less management-intensive, such as medical office
We’ve seen an increase in marketplace velocity in 2021 and it’s mostly small investors driving this increase. It’s mom and pop stores and landlords who own small single-family rental duplexes, four-plexes, farmers, or other business owners that are taking advantage of this high-value, low interest environment to transition into other real estate Investments.
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