What is Asset Disposition?
Although we strongly recommend that investors continue building their wealth through multiple 1031 Exchanges, we also understand that sometimes people need to quickly dispose of an asset. If you are looking to unload a property, and are willing and prepared to pay capital gains tax on the sale, 1031 Equity Exchange, LLC can help you dispose of the asset in a fast and orderly fashion within our 1031 Equity Exchange Network™.
REO and Distressed Assets
REO, also known as Real Estate Owned properties, represent a tremendous buying opportunity for investors. In simple terms, REO is property that a lender or financial institution has obtained from a defaulting borrower during a foreclosure process. The lender is usually becomes the unwilling owner and operator of distressed assets that are sitting on their balance sheets after failing to sell at a foreclosure auction. In commercial real estate, we refer to these sorts of assets as distressed assets, because the lender or new owner is either forced or highly motivated to sell fast. As a result thereof, most distressed assets are sold for substantially below their market value.
REOs represent a tremendous buying opportunity for investors because lenders are not in the business of owning real estate. Often, lenders holding distressed assets are willing to remove some of the liens and expenses attached to the property in order to sell it quickly. Their primary goal is to unload the property, even at a steep discount, and get it off their balance sheets.
At 1031 Equity Exchange, LLC, we partner with financial institutions to help them dispose of their distressed assets through our 1031 Equity Exchange Network™.
Where Does 1031 Equity Exchange, LLC Come In?
As a Commercial Real Estate Investment and Brokerage firm, part of our efficacy lies in our nationwide network of investors, brokers and lenders. We partner with investors, brokers and lenders across the country, each of whom is either a motivated buyer or a motivated seller.
By providing a platform for like-minded investors to discover each other, our 1031 Equity Exchange Network™, makes it easier for you to either acquire or dispose of any Commercial Real Estate asset.
What does this mean for investors?
For our 1031 Equity Exchange Network™ members, distressed assets represent an excellent investment opportunity. These properties can usually be acquired at a significant discount, allowing you to either make some essential improvements and hold it short-term for a profit or reposition it and hold it long-term for high CAP Rate returns into the future.
What does this mean for lenders?
For lenders and other financial institutions, our 1031 Equity Exchange Network™ of investors makes it easy to unload distressed assets. Rather than have distressed assets sit on their balance sheets, we put these lenders in touch with potential buyers.
If you do not have enough capital (or if you wish to only make a partial investment in an asset), we also help facilitate limited partnerships between investors. A limited partnership (LP), or limited liability partnership (LLP), is when two or more business partners conduct business jointly. In a limited partnership, none of the limited partners are liable for the debt of the company. They are only responsible for the amount of money they have personally invested. Although a limited partner does not receive dividends, they are entitled to a percentage of income.
There are two primary advantages to forming a limited partnership for commercial real estate:
- Limited partners are not liable for the debts of the company unless they sign as personal guarantors.
- Second, a limited partnership enables an investor to align with like-minded individuals and purchase an asset that would otherwise be beyond their financial means.
By partnering with other investors, a limited partner can acquire a stake in a property they could otherwise not afford.