Author: James Bean<\/a> This post originally appeared on Best1031Online<\/a> and is republished with permission. Find out how to blog with us<\/a> on theBrokerList.<\/p>\n You\u2019ve probably heard the saying before: \u201cPeople don\u2019t plan to fail\u2014they fail to plan.\u201d<\/em> That quote couldn\u2019t be more true when it comes to 1031 Exchanges.<\/p>\n The following is an overview of the steps a property investor should take in the proper planning of a possible 1031 Exchange. This is the first of a four part series, where I will break down each phase of steps\u2026 First steps\/ Next Steps\/ Final Steps \u2013 Execution.<\/p>\n If you\u2019ve followed me for any amount of time, you know that more than 60% of 1031 Exchanges fail. Every year. Let that sink in. And while there are countless reasons why, the underlying common denominator is almost always the same: a complete lack of planning<\/strong>.<\/p>\n It\u2019s shocking how often I hear this: At that point, I can\u2019t help but shake my head. If you\u2019re in escrow and haven\u2019t mapped out a solid plan, you\u2019re already behind. And unless you\u2019ve had a conversation with me early on, there\u2019s a good chance you\u2019re setting yourself up for an avoidable failure.<\/p>\n The truth is, any investor thinking about selling an investment property with substantial equity and minimal debt should begin their 1031 planning immediately<\/strong>\u2014BEFORE<\/strong> they put it on the market, not after escrow opens, not while they\u2019re packing up files, not after their CPA warns them about the tax bill.<\/p>\n Let me be blunt: by the time you\u2019re in escrow without a plan, your clock is already ticking. And in many cases, it\u2019s too late to go back and fix what should\u2019ve been addressed months\u2014or even years\u2014earlier.<\/p>\n Ownership Matters More Than You Think<\/strong><\/p>\n One of the biggest mistakes I see is investors assuming they even qualify for an exchange under their current ownership structure. That\u2019s a dangerous assumption. Not every entity or ownership scenario is eligible to complete a like-kind exchange. Some investors learn that the hard way\u2014after<\/em> they\u2019ve gone into contract.<\/p>\n Reworking entity structures or restructuring ownership rights can take months, and in certain cases, years<\/strong> to do it correctly. You can\u2019t force a clean 1031 Exchange overnight.<\/p>\n I\u2019ve seen it too many times: a seller charges into escrow without verifying if they\u2019re even eligible to exchange. By the time they realize they can\u2019t, it\u2019s too late to reverse the sale, and they\u2019re hit with a painful, avoidable tax bill.<\/p>\n Planning is Everything\u2014Start with the End in Mind \/ First Steps<\/strong><\/p>\n Before anything else, the investor should be asking:<\/p>\n For many of my clients, a properly structured exchange opens the door to generational wealth. But you have to plan for that\u2014not stumble into it.<\/p>\n Once those investment goals are clearly defined, it\u2019s time to put a real plan in motion<\/strong>. That starts with assembling the right team:<\/p>\n Next Steps \u2013 Know Your Options!<\/strong><\/p>\n When you\u2019ve done that homework\u2014before<\/em> you list your property\u2014you\u2019re in a position of strength. You now know the marketplace, you understand your fallback options, and you\u2019re ready to move when that serious buyer steps up.<\/p>\n Final Steps: Execution in Motion<\/strong><\/p>\n Here\u2019s how it should go: once your upleg options have been vetted and you\u2019ve got a mapped strategy in place, you list your property. When a buyer comes along and their earnest money deposit goes non-refundable\u2014then<\/strong> you start submitting offers on your replacement property.<\/p>\n This way, you\u2019re not scrambling during the tight 45-day identification window. You\u2019re acting with purpose and precision. That\u2019s the difference between closing a successful exchange and watching one fall apart.<\/p>\n Even the Best Plans Need Flexibility<\/strong><\/p>\n Even with a rock-solid plan, things can still go sideways. Deals fall out. Properties get snatched up. Lenders can create roadblocks. That\u2019s exactly why the upfront planning is so critical\u2014because the margin for error once escrow closes on the relinquished property is razor-thin.<\/p>\n Remember: you have 45 days to identify<\/strong> and 180 days to close<\/strong> from the date your downleg closes. That\u2019s not a lot of time. It goes by fast\u2014especially if you\u2019re just starting your planning process the day your sale closes<\/p>\n Bottom line<\/strong>: If you\u2019re an investor thinking about selling an income property, don\u2019t wait. Don\u2019t assume. Start the 1031 planning conversation early. Get your team aligned, your upleg strategy dialed in, and your entity structure reviewed.<\/p>\n You don\u2019t plan during a 1031 Exchange\u2014you plan before<\/strong> it.<\/p>\n Let me help you get it right the first time.<\/p>\n We Are Here to Help!<\/strong><\/p>\n If you are an investment property owner who is interested in a no obligation, private consultation, please visit www.Best1031Online.com, or contact James Bean If you are an agent\/broker, I am happy to discuss strategies with you on how to best serve your next listing client in preparing them for a successful exchange. Please visit the site and click on the Agent\u2019s button located at the top right-hand corner of the Home Page!<\/p>\n Don\u2019t know what certain terms mean? Want more on the 1031 Exchange? And visit CRE Task Wizard at https:\/\/cretaskwizard.com\/<\/a>, who supports me in making the channel happen.<\/p>\n Please stay tuned and follow me on LinkedIn, X (formerly known as Twitter), Instagram, & Facebook @1031BrokerJames.<\/p>\n All information is deemed to be accurate and is not tax or legal advice. All investors\/taxpayers should consult their CPA, tax attorney and investment advisors.<\/p>\n The post PLANNING \u2013 A FOUR PART SERIES<\/a> appeared first on Preserve Your Wealth in CRE<\/a>.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":" Author: James Bean This post originally appeared on Best1031Online and is republished with permission. Find out how to blog with us on theBrokerList. Why 60% of 1031 Exchanges Fail: No Plan = No Chance You\u2019ve probably heard the saying before: \u201cPeople don\u2019t plan to fail\u2014they fail to plan.\u201d That quote couldn\u2019t be more true when […]<\/p>\n","protected":false},"author":1,"featured_media":301856,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[99],"tags":[3341,10922,1297],"dealstore":[],"offerexpiration":[],"class_list":["post-301855","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate","tag-part","tag-planning","tag-series"],"yoast_head":"\n![\"Why](\"https:\/\/blog.thebrokerlist.com\/wp-content\/uploads\/2025\/04\/Planning-JAN2025.png\")
<\/p>\nWhy 60% of 1031 Exchanges Fail: No Plan = No Chance<\/strong><\/h2>\n
\u201cWe\u2019re already in escrow on our property to relinquish (downleg)\u2026 and now we\u2019re trying to figure out our exchange options.\u201d<\/p>\n\n
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of SVN-Rich Investment Real Estate Partners, CA DRE# 01970580, at 805-779-1031
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