The new options available under the loosened 1031 exchange law can very powerful vehicles for personal investors. The new 1031 exchange options allow investors to diversify geographically, to eliminate management (through exchanging into triple net leases), to increase yields (particularly if you are exchanging away from the low cap rate geographies like the Bay Area), and to reduce principal and tenant risk (if you are exchanging into institutional properties). See nestegginvesting.com (link) for more general information on 1031 exchanges.
That's great in theory, but how should you pursue these 1031 transactions? We're beginning to research actual firms that provide 1031 exchange options and our advice is be careful and really do your homework. This is a new industry, and while there are some reputable firms, we've certainly found plenty of fly-night operations.
To help you do your homework, we've created a diligence list of good questions to answer before working with a 1031 syndicator. As always, consult your financial and tax advisor. Also, we’ve also created a website of 1031 TIC listings at www.the1031ticexchange.com (link). Really look in depth at the sponsors websites before calling.
