Father’s Day is celebrating its 100th anniversary this year on June 19, and it all began when a young woman wanted to honor her dad.
In May of 1909, Sonora Smart Dodd of Spokane, Wash., sat in church listening to a Mother’s Day sermon. She decided she wanted to honor her Dad, William Jackson Smart. Dodd’s mother had died in childbirth, and Dodd’s father, a Civil War veteran, had taken the responsibility of singlehandedly raising the newborn and his other five children.
The following year, Dodd wanted to celebrate Father’s Day on June 5th, her father’s birthday, and petitioned for the holiday to be recognized in her city. But with typical government bureaucracy, Spokane’s mayor pushed the date back by two weeks, and the first Father’s Day was celebrated on June 19, 1910.
This is a Pic of my Father-in-Law celebrating his 90th Birthday in the hospital during this year’s Superbowl. Don is a Father, Grandfather, Great Grandfather, Husband and absolutely the Finest Man I know. Happy Father’s Day to all the Fathers!
Good Morning on this Father’s Day 2017!
We recently had a client looking to complete their 1031 Exchange with a brand new “Build-to-suit” Replacement Property. Their rationale for going down this “still under construction” property road was that the owner/developer of the property was willing to offer a slightly more attractive Cap Rate as well as other lease terms to entice a Buyer to purchase his yet to be completed property. (20 year NNN lease, 6+% Cap Rate and 2% Annual Bumps in the Rent. You’ll see a handful of new Build-to-Suits on this Week’s Digest)
In all honesty, the higher Cap Rate was offset by the Buyer incurring greater risk. In a 1031 Exchange whereby the Exchanger is looking to exchange into property that is still being constructed, the single most important element of the 1031 trade is timing.
As we’ve mentioned previously, 1031 Real Estate Exchanges are defined by their unbending rules and regulations. One such cast-in-stone rule that was established through the Tax Reform Act of 1986 is the 180-day exchange period under IRC Section 1031. Simply stated, the 180-Day Rule says that in order to successfully fulfill the requirements of 1031, the Replacement Property must be Closed by the Exchanger no later than 180 days from the date that the Relinquished Property was SOLD.
This 180 Day Rule coupled with the potential construction delays inherent in any new Build-to-Suit property make this a Replacement Property Strategy not for the faint of heart.
So what happens if construction is Not complete on Day 180? If on Day 180 the Exchanger does a “partial closing” on the yet to be fully completed Replacement Property, the stringent 1031 Rules on new construction kick in. Any improvements made to the property after it is received by the taxpayer are not considered “like-kind” to real estate.
In other words, let’s say that our Exchanger is buying a $3 mill Build-to-Suit as his 1031 Replacement Property. And let’s also say that on Day 180 he closes on the new property with $1 mill in improvements still yet to be completed on his new Replacement Property. 1031 Rules say that he is able to claim only $2 mill toward his 1031 Exchange as the unfinished $1 mill in new construction is not considered to be “like-kind” real estate for the purposes of his Exchange.
Moral of the Story: When it comes to Build-to-Suit 1031 Replacement Properties, you need to pursue this route with both eyes wide open. Permitting, weather, construction delays and cost overruns can easily throw your 1031 Replacement Property into Exchange Jeopardy. There are some exchange strategies specifically designed to reduce the risk of 1031 Build-to-Suits, but the easiest might just be planning your 3 Property Identification cautiously. It might not be the best of ideas to identify all three of your properties as being under construction.
Still the potential for higher returns that Build-to-Suit Replacement Properties can offer make this an enticing strategy.
Just be careful.
This  Week’s Digest  is a snapshot of a variety of Triple Net Leases Single Tenant properties that have been sent to me by a variety of commercial real estate brokers from all over the US. What I’ve selected & am showing here is designed to give you a “flavor” as to where Cap Rates are on a variety of NNN propertie s  with different credit strength of the tenants, different lease maturities and different locations.
Let me know if you have questions or require additional details on any of the properties listed. And if you don’t see what you’ve been looking for, let me know & we’ll be happy to do a National Search.
Again, save yourself a ton of time & effort by having us do the “heavy lifting” when it comes to finding NNN properties. There’s just no way that you can access the same properties that I see. Simply put, our Concierge Service can not only save you a ton of time, but it will also put properties in front of your that you most likely wouldn’t have seen. Let us do the work for you.
I have attached below for your review this week’s issue of our Wee kly NNN & 1031 Property Digest.  
 
As always, if you have Questions or would like us to help you with a property search, don’t hesitate to reach out to me.
Have a great week & let me know how I can Help!
Steve
239-898-8918
carnegiewealth@earthlink.net
www.1031nnnhelp.com
 
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Remember : Our  Digest  is just a “snapshot” of the types of properties that were sent to us this week from various sources all across the country. If you don’t see a particular tenant that you have an interest in, just reach out to us and we’ll go find it if it’s available.
 
This  Digest  is simply a posting of some of the daily email blasts I receive from brokers all across the country every day. It is designed to give you a “flavor” as to where the market is currently in terms of Cap Rates vs. Tenants vs. Length of remaining Term. These properties are all available for Sale at the time the Digest was pulled together. If for some reason you see something on our list and it is no longer available, chances are really good that we can find you a very similar listing in terms of Tenant, Cap Rate, & Term in a very similar Location.
Use the Digest as a tool to get an understanding as to “what’s out there currently”. Once you know the type of property you’re interested in, we can help you find the property, submit the Letter of Intent and begin your Due Diligence process.
Let me know if I can provide any additional details or answer any questions.
Steve
239-898-8918
carnegiewealth@earthlink.net
www.1031nnnhelp.com
 
Visit us on Facebook at:
 

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