The benefits of disposing multiple properties using a "1031" real estate exchange

We all know that we can keep 100% of our equity working for us, when we dispose of an income-producing or investment held property, by acquiring other income-producing or investment held property. This is possible through a "1031" real estate exchange. What you may not know is that we have the opportunity to dispose of many scattered properties and consolidate our portfolio by acquiring one large property through a "1031" real estate exchange. The benefits of disposing of many scattered smaller properties, and using the equity to acquire one large property is endless and some of the rewards include: * Consolidation of your real estate portfolio from a property management point of view (one property one location vs. multiple scattered properties.) * Being able to double or even triple one's real estate portfolio by using your current equity position in your scattered relinquished properties (this can be accomplished through a ("financial physical.") * Being able to acquire a new replacement property before disposing of the scattered relinquished properties (knowing what you are acquiring before disposing.) * Being able to fund the acquisition of the new replacement property before disposing of the scattered relinquished properties (using your current equity through gap financing.) * Being able to increase your cash flow after taxes (CFAT) on a new replacement property (able to keep more income through the use of leverage and additional tax shelter from a larger property.) * Being able to go from management intense scattered properties, into one new management-free real estate investment (opportunity of passive vs. active ownership.) * Being able to even put part of your equity from your relinquished properties into your pocket tax-free at the end of the "1031" process. All of these benefits are possible to receive through the use of a "1031" real estate exchange. With the use of a skilled professional known as a "qualified intermediary," and a knowledgeable real estate investment broker, the ability to combine the use of a "deferred exchange" and a "parking exchange" can accomplish all of the benefits mentioned above. Even if you don't have your scattered relinquished properties on the market for sale or you may have one or two of your scattered relinquished properties under contract for sale, you may have three or four other scattered properties that you would like to include in the mix. The sales then can be coordinated and the purchase of the replacement property can be made before all of the sales with the proper planning. In addition, you have the opportunity to receive some of your equity from your scattered relinquished properties back in cash, tax-free. This can be used for whatever purpose including adding improvements to the new replacement property if necessary. So, if you want to keep 100% of your equity working for you instead of turning over as much as one third of your selling price to Uncle Sam when disposing of income-producing or investment held properties. If you would like to double or even triple your real estate portfolio with just your current equity in your scattered properties. If you would like to acquire one large property and dispose of your many scattered relinquished properties. If you would like to acquire your new replacement property before disposing of your relinquished properties, even receive some cash back tax-free at the end of the "1031" process. Then you want to learn more about using a combination of "deferred exchanges" and "parking exchanges" when structuring your next transaction. Russell Gullo, CCIM, CEA, is a certified exchange advisor and president of R. J. Gullo & Co., Inc., Buffalo, N.Y.