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Different types of exchanges

There are three options for types of exchanges. They include Standard Exchanges, Reverse Exchanges, and Improvement Exchanges. Read more about the kinds of exchanges and our patent-pending secure transfer process to see which is the best fit for you.

Secure exchanges

The security protocols that we’ve put into place will ensure that your money will be safe in your exchange account. It’s simple and secure. We open an account with the bank and follow a proprietary process to send outgoing wires. Our process is more secure compared to industry standards – we even have a patent-pending on it.

Learn more about our security

We require that for every secure exchange we open, we must include a mandatory Qualified Escrow Agreement. With this type of agreement, the bank must obtain your written approval before any of your money is moved.

After the account is funded, we cannot move your funds without your approval via signature. Our process still includes insurance for Errors and Omissions and a Fidelity Bond for theft, but the system that is best for your security is using a Qualified Escrow Account. This account will require your signature for any transaction. This restricts our access to your account, and the bank can manage the interactions.

When you set up a Qualified Escrow Account, the bank will need your signature and authorization for any wire transfer made, and your funds will not be touched without your approval. Similarly to a bank, we use a two-factor authentication to assure your account and wire authorizations are secure. 

Standard exchanges

The security protocols that we’ve put into place will ensure that your money will be safe in your exchange account. It’s simple and secure. We open an account with the bank and follow a proprietary process to send outgoing wires. Our process is more secure compared to industry standards – we even have a patent-pending on it.

$100 Purchase

Paul bought this house for a price of $100,000

Sold for $300K

After setting up his exchanges, 
Paul sold for $300,000. A tax 
savings of 60,000 on his profit

Two $150K Purchases

Paul reinvested all of his profit into new, no-management investments that make him twice the monthly rent, without paying a cent in taxes!

Reverse exchanges

These explanations are simplified for educational purposes. There are potential pitfalls to be aware of. Please contact our Reverse Exchange Department (866) 944-1031 or schedule a consultation for a comprehensive recommendation. 

All Cash

This method implies that the purchase is made completely with cash. Funds for the purchase can be from refinancing money or available cash on hand.

Parking Method

With this method, purchasers have the option to finance a replacement property with a traditional mortgage. When purchasers choose this method, the title of Relinquished property is deeded to the Accommodator before the close of escrow for the replacement property. Once the Relinquished property has sold, the exchange will be complete. 

Financing
On occasion, lenders may finance a Reverse Exchange. Oftentimes lenders do not fully understand Reverse Exchanges, and if approved may result in higher interest rates.

Improvement exchanges

This type of exchange is a great tool because the value of the improvements can be directly counted toward your exchange. For example, if you sell a property for $100,000 and buy an $80,000 property in exchange, you can spend $20,000 on improvements and the exchange will be complete because of the total acquisition cost adding up to $100,000.

Things to consider

These exchanges are very complex and these are simplified explanations. There are potential pitfalls to be aware of. Please contact our Improvement Exchange Department (866) 944-1031 or schedule a consultation for a comprehensive recommendation.

Every dollar spent is tax free! If money is returned back at the end of the exchange, they would be taxable. So consider improving your property! 

Our fees for improvement exchanges are $5000*, so unless the improvements you are considering are more than $30,000, where taxes would be $10,000, paying the additional fee may not make sense. You can also improve property you currently own. Please call or schedule a consultation to ask about the details.

Do I qualify? checkmark icon

Do I qualify for a 1031 exchange?

Read from the list below to see if your property may qualify to take advantage
of a 1031 Exchange. Or, take our quiz!

Take our survey below to see if your property qualifies for a 1031 exchange.
Even if your property cannot be sold tax free, we will let you know about any
tax breaks that you may be able to take advantage

Type of property