An example of a White Mountain real estate investment strategy as it can work for income property sellers. I had a buyer with a low basis (original purchase price) and a high return (resale price) on an apartment building he sold out of state. We made sure he qualified the sale (of the disposed property) as a 1031 like kind exchange, which required all the proceeds of his sale to go directly to a qualified intermediary. My buyer had some time prior to the completion of his sale to look at alternative investments, and he had an additional 45 days after the transaction to identified potential “replacement property”.

We went back and forth over buying one property for the $400,000 target reinvestment or buying multiple properties adding up to the target number. Some of the concerns raised in buying the one property was he would have some of the same issues but from further away if he bought another apartment building, if he purchased a single family home in a nice neighborhood with the proceed of the exchange it couldn’t provide the returns the relinquished property had. The creative solution that worked best in this case was to buy two different types of property and treat them as separate investments.

One issue that came out of our conversations was the overhead was increasing in the property being sold there where maintenance issues, rising taxes and long term tenants that caused constant work for my customer. We settled on the purchase of a condominium with a short term rental program and on-site maintenance and a second purchase of a large parcel of land. The Condo provided some monthly income but no long terms tenants (the work was provided by the management company), and allowed for some periodic visits to the resort property (near a Ski area). The land is to be held for long term investment with an eye towards eventual resale, and in the mean time there is virtually no maintenance required and a very low tax bill with over 10 acres being in current use. As land in the area becomes more scarce it may prove to be a better return for the owner to subdivide, or develop the land but with no mortgage on the land, wait and see is the strategy for now.

Alpine Lakes is experienced in 1031 exchanges, and we realize the shortest distance between two points is not always a straight line (when it comes to real estate).